Enter multiple symbols separated by commas

Nike Posts 8% Rise in Earnings, Beating Expectations

Nike reported on Thursday quarterly net profit growth of nearly 8%, topping Wall Street estimates, as improved performance in its difficult European market helped offset disappointing U.S. results.

Net income for the quarter ended Feb. 28 totaled $350.8 million, or $1.37 a share, versus $325.8 million, or $1.24 a share, during the same period last year. Revenue grew 9% to $3.93 billion, up from $3.61 billion a year ago.

The world's largest maker of athletic shoes and clothing also reported a robust 9% rise in global forward orders, analysts said.

"Forward orders of the overall company clearly are good," said Susquehanna Financial Group analyst John Shanley. "That's what's driving the stock in the after market."

Net profit in the third quarter rose to $350.8 million, or $1.37 a share, from $325.8 million, or $1.24 a share, a year earlier. Quarterly sales rose 9% to $3.9 billion.

Analysts, on average, had expected earnings per share of $1.33 excluding items, according to Reuters Estimates, and $1.36 including items.

Nike has said it can reach annual global sales of $23 billion by fiscal 2011.

A favorable currency exchange rate boosted revenue by 3 percentage points and gross margins improved during the period, Nike said.

But analysts noted Nike sales in the United States -- where footwear rose 2% and apparel rose a mere 1% -- appeared low.

McAdams, Wright, Ragen analyst Sara Hasan said Nike's U.S. results fell far below the 8.1% rise she had expected.

"I was surprised performance in the U.S. wasn't stronger," Hasan said, a view echoed by Shanley. Both analysts were anxious to hear more detail from Nike on an upcoming conference call.

The global brand, known for its "swoosh" logo, is opening 100 new Nike-owned stores around the world as its two main U.S. customers, Foot Locker and Finish Line, have struggled with disappointing sales. Some on Wall Street also question whether the popularity of non-athletic, European-styled footwear has cut into sales of the company's core products.

Beaverton, Oregon-based Nike said worldwide forward orders for footwear and apparel slated for delivery from March to July rose 9%. That compared with a 2.9% increase in the same period last year.

Sales in the United States, Nike's largest market, rose 2%, while the European region -- where sales have been soft for more than a year -- saw a 15% rise. Sales in Nike's Asia Pacific region grew 11%.

Revenues from Nike's other businesses -- including hot brands such as Converse and Hurley and its lower-cost Exeter Brands division, where shoes are sold in chains such as Payless ShoeSource -- rose 15%.

Nike shares -- which have risen 11% since the start of the year and 27% since January 2006 -- are valued at nearly 17 times 2008 earnings, above German rivals Adidas at nearly 12 and Puma at 12.5. Nike also trades above much smaller U.S. rival Skechers USA and the Dow Jones U.S. Consumer Goods Index, at 15.9 times forward-looking earnings.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Mark Cuban and Donald Trump

    Donald Trump appears to have Mark Cuban's vote, at least in terms of how the billionaire real estate mogul is conducting his political campaign.

  • Ferrari 488 Spider

    Ferrari's new 488 Spider will have a V-8 turbo engine and a retractable hard-top roof that lowers in just 14 seconds.

  • Members of the New Horizons science team react to seeing the spacecraft's last and sharpest image of Pluto before closest approach later in the day at the Johns Hopkins University Applied Physics Laboratory (APL) in Laurel, Maryland July 14, 2015.More than nine years after its launch, a U.S. spacecraft sailed past Pluto on Tuesday, capping a 3 billion mile (4.88 billion km) journey to the solar system's farthest reaches, NASA said.

    The New Horizons Pluto flyby mission set records for NASA's social media and web metrics——but why do we care so much?

U.S. Video