NIKE, THE world’s largest sporting-goods company, has reported third-quarter profit that top analysts’ estimates as sales gained in North America.
Net income in the quarter to February 29th rose 7.1 per cent to $560 million, or $1.20 a share, from $523 million, or $1.08, a year earlier, the company said in a statement. Analysts had, on average, projected $1.17 a share.
Nike’s profit has surpassed analysts’ projections in 22 of the past 23 quarters.
The maker of Air Jordan basketball shoes has been using new products in categories such as running to lure consumers who are spending more on athletics gear across the industry. The strategy helped boost Nike sales 17 per cent to $2.15 billion in North America, the company’s largest market.
“Demand behind the brand is continuing to stand very tall and accelerating a bit more,” Matt Arnold, an analyst at Edward Jones said. “The other side of the equation is on the margin,” where higher prices eventually would help improve profit margins.
Gross margin, or the percentage of sales left after the cost of goods sold, narrowed two percentage points to 43.8 per cent from a year earlier. The company had projected a decline of 1.5 percentage points.
The measure has fallen for five straight quarters as Nike faces higher costs and the company forecast a sixth decline this quarter of one percentage point.
Pressure continued on labour prices, while costs for raw materials were easing, chief executive Mark Parker said on a conference call with analysts.
The company introduced widespread price increases in January and began cutting costs to help it increase gross margins in fiscal 2013, chief financial officer Don Blair said.
Nike’s results follow large customers such as Dick’s Sporting Goods and Foot Locker, which increased sales in the quarter to January 28th. Revenue rose 6.1 per cent at Dick’s, the largest US sporting-goods retailer, and 7.9 per cent at Foot Locker, the world’s largest athletic-footwear chain.
Sales at Adidas, the world’s second-largest sporting-goods maker, probably would increase “at a mid- to high-single- digit rate” this year, the German company said earlier this month. – (Bloomberg)
