Nike (NKE) Sprints Past Earnings Estimates

Nike (NKE) blew away Wall Street last week, after reporting earnings that topped analyst estimates by a wider margin. The athletic footwear and apparel maker's diluted earnings per share rose 37% to $0.86 per share, while revenue climbed 8% to $7.0 billion. Nike's order backlog also increased, with worldwide futures orders rising 10% excluding foreign currency impacts. Daily Chart

Nike's revenue came from two main brands -- Nike, which generated $6.5 billion in sales, and Converse, which reported sales of $494 million.
Sales of Nike products rose 7% year-over-year as sales of Converse climbed 16%. The company reported strong sales of Nike products in every global region except for China. The brand's leading products were its running, basketball, soccer, and men's training footwear products. However, demand for sportswear waned slightly and offset some of those gains. Converse, on the other hand, experienced strong growth in its largest markets -- the United Kingdom, North America, and China. Nike also kept its margins growing and expenses in check during the quarter. Nike's gross margin expanded 120 basis points to 44.9%, thanks to stronger sales of higher margin products, fewer discounts, and increased sales through its direct-to-consumer business. However, its margin growth was slightly offset by higher labor costs and foreign currency impacts. Selling, general, and administrative expenses held steady year-over-year at $2.1 billion. Nike also reported a lower effective tax rate, at 25% compared to 26.9% in the prior year quarter, thanks to a shift of operations overseas. Nike also finished the quarter with cash and short-term investments of $5.6 billion, a $2.3 billion increase from the prior year. That big cash boost was primarily attributed to an issuance of debt and the sale of its Umbro and Cole Haan businesses. The company also bought back 8.4 million shares for $526 million during the quarter as part of its four-year $8 billion buyback program. CEO Mark Parker was optimistic regarding Nike's long-term prospects. "We had a great first quarter driven by our unrelenting commitment to delivering innovative products and services to athletes around the world," he stated. "Our powerful portfolio of businesses combined with unmatched leadership and resources allows us to capitalize on opportunities that drive long-term value for our shareholders. I am more excited than ever about our potential to continue to innovate with purpose, and fuel NIKE's growth." Other News About NKE Nike Shares Surge 6% on Strong Earnings, Sales Nike is still outrunning the competition. Nike Earnings Just Did It Can Nike keep up the pace? Other Stocks in the News Twitter's IPO Filing Coming This Week Could Twitter's IPO arrive ahead of schedule? Could Pharmcyclics Drug Be a Mega-Blockbuster? Could this biotech's drug be the blockbuster of the decade? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Oct 4, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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