Nike Sees Q1 Profit Fall 10%, But Sales Up Due To Core Brand Growth
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Nike Q1 Profits Dampened By
Costs Of Olympics Promotions |
Despite "strong overseas growth," Nike Inc.'s Q1 profit for FY '09 fell 10.4% as sales were "damped by the costs of promotions timed to the Olympics and the lack of a tax benefit of $105.4[M] from the year-ago quarter," according to Nicholas Casey of the WALL STREET JOURNAL. Nike's profit for the quarter ending August 31 dropped to $510.5M ($1.03 a share) from $569.7M ($1.12) in the year-ago period. But sales climbed 17% to $5.43B from $4.66B last year, boosted "largely by growth in its core brand." Sales for the Nike brand increased 18% to $4.8B. Sales for Nike's subsidiaries, including Converse, Cole Haan and Hurley, rose 7% to $655.3M from $612.8M in the year-ago period. Nike's Asia-Pacific region sales increased 36% to $860.6M, and sales in the Americas region climbed 26% to $355.7M. U.S. sales rose 8% to $1.8B. Nike said that "future orders for athletic footwear and apparel, scheduled for delivery this fall and in early winter 2009, increased 10% from last year to $6.8[B]." The company added that it will "continue efforts to court consumers from China, where sales had risen 50% in the last quarter, in part because of an Olympics campaign" (WALL STREET JOURNAL, 9/25). The AP's Sarah Skidmore noted analysts surveyed by Thomson Reuters on average had expected Nike to "earn [$0.92] per share on sales of $5.19[B]." After the earnings report, investors "sent Nike shares up in after-hours trading" (AP, 9/24). Susquehanna Financial analyst John Shanley: "The key thing that will drive the stock up is futures in the U.S. market. Investors are going to be very pleased" (REUTERS, 9/24). At press time, Nike shares were trading at $65.31, up 10.2% from yesterday's close of $59.27 (THE DAILY).
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