Nike Boasts Q3 Profit Thanks To Strong Overseas Sales
Nike yesterday said that the company's Q3 profit "jumped more than 30[%] because of strong sales overseas and beneficial currency exchanges," according to the Portland OREGONIAN. Nike's net income grew to $463.8M, or $0.92 a share," up from $350.8M, or $0.68 per share in the same quarter last year. Revenue for Q3 grew 16% to $4.54B, compared with $3.93B in '07. Changes in currency exchange rates accounted for 6% of revenue growth for the quarter. Nike President Mark Parker said the results are a "clear indication that our strategy is working and that we're on track to achieve our financial goals for this fiscal year and beyond." Nike's Q3 sales grew by 5% in the U.S. to $1.6B, by 23% in Europe to $1.4B and by 27% in its Asia Pacific region to $748M. Sales at Nike's other businesses Converse Inc. and Nike Golf grew by 15% to $601M (Portland OREGONIAN, 3/20). Goldman Sach analyst Brad Cragin writes that Nike is well-positioned for growth outside the U.S., citing the "increasing popularity of technical athletic footwear in Europe, growth in emerging markets, foreign-exchange benefits, and demand ahead of the Beijing Olympics and the European Football Championships" (Wall Street Journal, 3/20).
STAYING NEUTRAL: Susquehanna Financial analyst John Shanley said his company is “keeping our neutral rating on the (Nike) stock, even though they had a very strong third quarter.” Shanley noted Nike said on the conference call “they’re actually moving a lot of their demand-creation spending from the third quarter into the fourth quarter. As a result we’re taking our fourth quarter number down pretty dramatically.” The “demand creation spending” consists of marketing and advertising expenditures for “things like the Euro Cup and the Olympics.” Shanley: “It basically washes out any kind of gain that they got in the third quarter.” (CNBC, 3/20).
BEST IN BREED: The hosts of CNBC's "Fast Money'' Tuesday night discussed Nike's stock and the future of its share price. Macke Asset Management Founder & President Jeff Macke said to "buy and hold'' Nike. Macke: "These guys are going to make a dump truck full of money." CNBC Contributor Pete Majarian: "Goldman Sachs is best in breed in the financials. Nike is best in breed in the entire category.'' CNBC's Dylan Ratigan said the "biggest risk to Nike right now by any appearance would be manufacturing inflation out of China ... but more than overshadowed by a long list of benefits'' ("Fast Money,'' CNBC, 3/18).
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