Running-shoe maker beats forecasts with 32% gain
NIKE INC.
BEAVERTON, ORE.—
Nike Inc. said yesterday its first- quarter profit grew 32 per cent as the world’s largest sneaker and athletic apparel company posted broad gains in sales and orders. The results beat Wall Street forecasts and the company’s shares surged more than 6 per cent.
Quarterly earnings rose to $ 432.3 million ( U. S.), or $ 1.61 per share, for the three months ended Aug. 31, from $ 326.8 million, or $ 1.21 per share, a year earlier. Revenue climbed 8 per cent to $ 3.86 billion from $ 3.56 billion last year.
“ They beat my number by 20 cents,” said Jamelah Leddy, who tracks Nike for McAdams Wright Ragen in Seattle. “ I hate to use a cliché, but Nike is running on all cylinders.”
Future orders for footwear and apparel scheduled for delivery from September through January totalled $ 4.9 billion, an 11 per cent increase from the same period last year.
Nike shares rose $ 4.99, or 6.4 per cent, to close at $ 83.45 on the New York Stock Exchange. Its shares have traded in a 52- week range of $ 74.96 to $ 92.43.
In a conference call with analysts, chief financial officer Don Blair and co- president Charlie Denson emphasized the strong sales, profits and future orders early in the fiscal year signal solid growth. But they warned against raising expectations for the rest of the year based on the first- quarter performance.
“ Our profit growth was a bit stronger than we expected,” Blair said. “At the same time we’ve seen some cost pressure,” he added. “ As a result, our financial model for fiscal 2006 looks a bit different to us now than it did when we started the year.’’
Nike is now competing against a stronger rival after Number 2 Adidas-Salomon AG announced in August it will purchase Reebok International Ltd., substantially boosting the Adidas share of the U. S. shoe market — the largest single market for both Nike and Adidas.
Blair and Denson did not mention Adidas, but analysts said it was clear Nike is planning for a retail battle as the two companies prepare for the 2006 World Cup soccer championship.
“ We’re hearing that Nike is going to match or exceed the 145 million euros Adidas is going to spend for World Cup events,” said John Shanley, an analyst for Susquehanna Financial Group. The possible budget for that marketing campaign translates to about $ 205 million ( Canadian) at current exchange rates.