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
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Published on Oct 4, 2013
By Leo Sun