Nike Profit Tops Estimates as North American Shoe Sales Gain

Earnings per share in the three months through Feb. 28 were 76 cents, the Beaverton, Oregon-based company said in a statement. The average of 26 analysts’ estimates compiled by Bloomberg was 72 cents.

The world’s largest sporting-goods company is benefiting from consumers increasingly buying athletic gear to wear every day, not just when working out or playing sports. For example, many of Nike’s shoe lines have become fashion accessories. That’s helped it continue to generate growth in mature markets such as North America, where sales gained 12 percent.

"It's a great quarter with sales up across the board," Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis, said in an interview. "Nike's product is firing on all cylinders right now," especially in basketball and running, he said.

Total revenue rose 13 percent to $6.97 billion. Analysts projected $6.81 billion, on average. Sales increased in every geographic region, including China, which posted a decline last fiscal year.

The shares rose 1 percent to $80.05 at 5:02 p.m. in New York after the close of regular trading. Nike gained 45 percent in the 12 months through the close today, compared with a 20 percent increase for the Standard & Poor’s 500 Index.

Orders Surge

Orders for the Nike brand from this month to July rose 14 percent, excluding the effects of foreign-currency exchange-rate fluctuations. Analysts estimated a 12.7 percent gain, on average, according to data collected by Consensus Metrix. The measure, known as futures orders, is closely watched because investors view it as a proxy for future sales.

There were a couple points of concern in the orders, Yarbrough said. North America future orders rose 9 percent, marking the first time they hadn’t recorded a double-digit percentage gain since 2010, he said. Orders in Greater China, which the company has been trying to turn around, declined 3 percent. Analysts expected a gain of 2.7 percent in China and 11.2 percent in North America.

The company’s gross margin, the percentage of sales left after subtracting the cost of goods sold, expanded 0.3 percentage point to 44.5 percent. That trailed analysts’ projections of 44.7 percent. The expansion was the fifth straight after two years of declines.

Sports Gear

The North American sports gear market has been booming. Foot Locker Inc., the largest athletic-shoe chain in the U.S., posted a 5.3 percent gain in same-store sales during a fourth quarter in which many retailers struggled. Revenue at Under Armour Inc. surged 35 percent in its most recent quarter. Those gains are enticing companies from Gap Inc. to Urban Outfitters Inc. to expand into the category.

Nike’s third-quarter net income fell 21 percent to $685 million from $866 million a year earlier, when it booked a gain from the sale of its Cole Haan and Umbro businesses.

By Matt Townsend with assistance from Courtney Dentch; Editors: Nick Turner, Kevin Orland, James Callan