NKE Nike Inc

By Sara Germano and Tess Stynes 

Nike Inc. posted a 20% jump in quarterly profit in a difficult retail environment, but its sales growth was slower than expected and executives cautioned that Wall Street's forecasts may be too optimistic.

The world's largest sportswear maker said its revenue rose 7.7% to $8.03 billion for the period ended Feb. 29, slightly below analyst expectations of $8.2 billion, according to FactSet. Excluding currency fluctuations, Nike said revenue rose 14%.

Nike has outperformed most apparel makers as it has expanded its e-commerce offerings and logged strong sales gains in China. On an earnings call Tuesday, Andy Campion, Nike's chief financial officer, said "not every dimension of our portfolio will have the same level of momentum each and every period."

Shares of the company fell 6% in after-hours trading to $60.91. The stock had risen about 30% in the past 12 months.

The Beaverton, Ore.-based maker of athletic goods last week unveiled its latest pipeline of technological advancements, including electronic running shoes that lace at the push of a button. It also showed a new app that combines Nike's training software with what it describes as a personalized e-commerce store that will give members exclusive access to products.

For the quarter ended Feb. 29, Nike reported a profit of $950 million, or 55 cents a share, up from $791 million, or 45 cents a share, a year earlier. Analysts expected a per-share profit of 48 cents.

Nike said futures orders, which reflect products scheduled for delivery from March through July, rose 12% on a global basis, compared with an increase of 2% a year earlier and the 15% growth from the last quarter. Futures orders are closely watched by investors as a benchmark for demand for Nike products.

At quarter's end, inventories were $4.6 billion, up 8% from a year earlier. Nike brand president Trevor Edwards said the company's high inventories from the holiday period had begun to "normalize" after Nike worked to clear excess product through its outlets and third-party retailers.

Nike's quarterly earnings report comes as most of the retail sportswear industry is facing a crunch, with the bankruptcy filing of Sports Authority Inc. shaking up the near-term forecast at Dick's Sporting Goods.

Revenue in North America increased 13%, while sales in its Greater China segment jumped 23%.

Gross margin was flat at 45.9% as higher average selling prices and growth in the higher-margin direct-to-consumer business were offset by negative currency impacts, higher warehousing costs and efforts to clear inventories in North America.

Nike has used expensive sponsorships to increase its market share in sports such as soccer and basketball. In the latest period, Nike increased such spending--called demand creation--by 10% to $804 million.

Write to Sara Germano at sara.germano@wsj.com and Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

March 22, 2016 19:09 ET (23:09 GMT)

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