NKE Nike Inc

   (FROM THE WALL STREET JOURNAL 12/23/15) 
   By Sara Germano 

Nike Inc.'s quarterly profit jumped 20% as the world's largest sneaker and sportswear maker continues to book strong orders from retailers and expands its own e-commerce sales.

While the Beaverton, Ore.-based company beat profit estimates for the 14th straight quarter, executives cautioned that gross margins may weaken slightly in the next period as Nike works to clear excess inventory in North America. The company is making way for new products geared toward next year's summer Olympics and other events, executives said.

Nike posted net income of $785 million, up from $655 million a year earlier, while revenue rose 4% to $7.69 billion for the quarter ended Nov. 30. Excluding currency fluctuations, Nike said revenue rose 12%. Inventories for the period rose 11% to $4.6 billion, in part due to higher average prices and growth in the company's direct-to-consumer sales.

World-wide future orders, a benchmark widely used as reference for demand for Nike products, rose 20% excluding currency effects. Those orders reflect items scheduled for delivery between December 2015 through April 2016.

Executives said the company is faced with clearing excess inventory in part because of "proactive" delays on product shipments from the West Coast port slowdown earlier this year, and will likely channel those products through its existing fleet of outlet stores.

Earlier this fall, the company announced plans to more than double its direct-to-consumer sales from $6.6 billion to $16 billion by 2020. On Nike's earnings call Tuesday, brand President Trevor Edwards said sales on Nike.com rose more than 50% in the most recent quarter. The company started online sales in Canada, Switzerland and Norway, during the three months ended in November with plans to do the same in Mexico, Turkey and Chile in the current period.

Aside from the word of caution on third-quarter gross margins, Nike reaffirmed guidance for the year. Shares of Nike closed at $131.85 on Tuesday and rose about 2% in after-market trading. Nike is the best performing stock in the Dow Jones Industrial Average, up about 38% in total return so far this year, according to the Dow Jones Market Data Group.

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Tess Stynes contributed to this article.

(END) Dow Jones Newswires

December 23, 2015 02:47 ET (07:47 GMT)

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