Nike Q4 Revenue Falls 30% Due In Part To Restructuring Charges
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Parker Says Nike Plans To Do
More Than Just Survive |
Nike yesterday said that FY Q4 revenue fell 30% from the previous year due to $195M in "restructuring charges, as revenue and margins slid and future orders dropped across all regions," according to John Kell of the WALL STREET JOURNAL. Nike reported earnings of $341.4M for the quarter ended May 31, or $0.70 per share, down from $490.5M, or $0.98 per share, from the year earlier. Revenue decreased 7.4% to $4.71B, while U.S. revenue fell 2% to $1.6B, as U.S. athletic footwear sales "increased 2% but U.S. apparel sales decreased 15%." However, Nike claims that "revenue would have been flat from a year ago" when excluding changes in currency rates. Despite the losses, Robert W. Baird & Co. indicated that Nike's "athletic footwear trend has remained fairly healthy over the last few months," and the company's various brands have "continued to take market share." Sales at Nike subsidiaries, including Converse and Hurley, dropped 5% to $702.3M from the previous FY. Kell notes the recent "decrease in the value of the dollar is expected to help Nike's results in the near term, although its hedging strategy minimizes the effects of currency fluctuations" (WALL STREET JOURNAL, 6/25). Fox Business' Charles Payne notes Nike bettered the street expectations by $0.03, marking the fifth straight quarterly report they have "beaten the street, but the stock was under a lot of pressure last night because orders for delivery between June and November declined 12% year-over-year. That's not good" ("Fox Business Morning," Fox Business, 6/25). BB&T capital market analyst Eric Tracy said Nike's quarter "was quite good given the environment. … But again, looking to those future orders there's a little bit of concern relative to expectations." However, Tracy said Nike "is really positioned better than most, and, if anything, comes through this in a better competitive position" ("Squawk Box," CNBC, 6/25). At presstime, shares of Nike were trading at $50.55, down 4.66% from yesterday's close of $53.02 (THE DAILY).
FASTER, HIGHER, STRONGER: Nike execs yesterday said that they have "positioned themselves to emerge from the recession stronger than ever." Nike President & CEO Mark Parker: "For many companies, success was defined as simply surviving. As we've said in the past, we plan to do more than just survive." Nike predicted a "long, slow upswing in the financial year that started June 1." In Portland, Laura Oppenheimer reports worldwide orders through November are down 12%, and the "next few months mark the one-year anniversary of explosive 2008 Summer Olympic sales, making last year's profits difficult to match." The company began cost-cutting efforts last year, as it "froze hiring, limited travel and slowed retail expansion." Parker said that Nike's decision in March to lay off more than 1,750 employees worldwide "was painful," but added that "eliminating extra layers of management ... reduces costs and builds a leaner, stronger company." Parker: "We did it for all the right reasons" (Portland OREGONIAN, 6/25).
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