Nike Inc sees quarterly revenue rise 55%Friday 22 March 2013 12.43
Shares in Nike Inc rose sharply overnight after the company said its income rose 55% in the last quarter.
The sports equipment maker attributed the growth to a resurgence in North America and an easing of material costs, which helped offset continued weakness in China.
The world's largest athletic shoe and clothing company's results beat expectations and its shares jumped 8% in aftermarket trading.
Nike Inc has been working to reduce its inventory in China and rework its offerings there to adapt to the changing tastes of Chinese consumers.
It also has been focusing on growth in North America, selling off less profitable brands like Umbro to focus on core brands like Nike.
The company's quarterly results show Nike's strategy is paying off in North America, but it is still facing weakness in China.
Net income for the three months ending 28 February rose to $866 million, or 73 cents per share. That compares with $560 million, or 61 cents per share, last year.
Analysts expected 67 cents per share, according to FactSet.
Revenue rose 9% to $6.19 billion, from $5.66 billion last year, nearly matching analysts' expectations of revenue of $6.2 billion.
Nike brand revenue rose 10% excluding currency fluctuations, growing everywhere but China and Japan. Growth from other brands including Converse, Nike Gold and Hurley rose 9%.
North American revenue, which accounts for 40% of the company’s total income, rose 18% to $2.55 billion. Revenue in China, which accounts for 10%, was down 9% to $635 million.
"The US business continues to be just phenomenal," said Morningstar analyst Paul Swinand. But he added that "for real long-term growth to be solid, it has got to come from China and emerging markets."
In a call with analysts, CEO Mark Parker said the company was seeing progress in China, but "we still have more to do before we can capture its long-term growth potential."
Looking forward, orders for Nike shoes and apparel to be delivered between May and July rose 6% to $9.9 billion. That includes an 11% increase in North America, a 5% decline in Western Europe and a 4% increase in China.
Mr Parker said ecommerce is a focus for the future.
Online revenue rose 33% in the quarter, but Mr Parker said he would like to grow that business more and the company will improve the online shopping experience.
"It's a pretty big gap between where e-commerce is today and where we can take it," he said.