Nike tops analysts’ profit forecast

NIKE, the world’s largest sports goods maker, posted fourth-quarter profit that topped analysts’ estimates as running and basketball gear drove sales in North America.

Net income in the quarter ended May 31 rose 5.4% to $698m, or 78c a share, from $662m, or 73 cents, a year ago, the Beaverton, Oregon-based company said yesterday. The average of 26 analysts’ estimates compiled by Bloomberg was 75c.

Nike is benefiting from consumers increasingly buying athletic apparel and gear for everyday wear, not just when working out or playing sports.

The trend has helped the company generate growth in mature markets such as North America, where sales gained 10% to $3.29bn last quarter, topping the $3.13bn average estimate from Consensus Metrix.

“Everything from Nike Free to their running business to the basketball business remains very solid,” Edward Jones analyst Brian Yarbrough said in an interview in St. Louis. “They continue to innovate and bring products to the marketplace.” Mr Yarbrough has a hold rating on the shares.

Orders for the Nike brand for delivery from June through November rose 12%, excluding the effects of foreign- currency exchange-rate fluctuations. Analysts estimated an 11.7% gain, on average, according to Consensus Metrix. The measure, known as futures orders, is closely watched because investors view it as a proxy for future sales.

The shares rose 1.1% to $77.68 at the close in New York. Nike has dropped 1.2% this year, compared with a 6.1% increase for the Standard & Poor’s 500 Index. Total sales rose 11% to $7.43bn. Analysts projected $7.34bn, on average. Revenue in Nike’s Greater China division rose 3.5% to $702m, topping analysts’ $666.4m average estimate.

The firm had been struggling to maintain growth in China, its second-largest market, as shoppers became choosier about which brands they bought. Futures orders in the unit advanced 6%, more than double analysts’ 2.5% projection.

In March, Nike said sales would increase at a high single-digit percentage rate, with results hampered by a strong dollar.

Nike said yesterday that currency reduced pretax income by $30m in the quarter.