Nike To Raise Prices On Variety Of Products To Offset Increasing Costs
Nike execs Thursday said that the company will “begin to raise prices on a broad variety of products in an effort to offset rising costs,” according to Murphy & Solsman of the WALL STREET JOURNAL. Nike, which posted a 5.2% increase in its fiscal Q3 earnings, said that “because of rising oil, cotton, labor and air-freight costs, its gross margins will continue to lag in the near term." Company execs said that the price increases “won’t begin to mitigate that margin pressure until next fiscal year.” Nike said that “gross margin in the latest quarter fell to 45.8% from 46.9% on higher costs combined with less license revenue.” In North America, Nike's “largest market, sales were up” 9% to $1.84B. Positive currency changes “helped propel Nike sales in China, Japan and emerging markets up nearly 15% to $1.39 billion, even with revenue in Japan falling 8% versus last year.” Japan sales in the latest quarter “were down 16%, excluding currency changes.” Currency changes “caused European Nike sales for the quarter to slip” $10M to about $1.16B, “most notably turning 6% revenue growth in Western Europe absent currency adjustment to a 2% sales decline.” Worldwide future orders, an “indicator of growth based on estimates of product orders," increased 11% to $7.9B (WALL STREET JOURNAL, 3/18). Nike President & CEO Mark Parker said, “It’s clear consumers remain under pressure from high unemployment and emerging inflation. Rising input costs such as labor, freight and materials ... will continue to affect our profitability near term." Nike VP & CFO Don Blair said that the company “expected ‘gross margin headwinds’ to continue through this and the next fiscal year” (OREGONLIVE.com, 3/17). At presstime, shares of Nike were trading at $77.36, down 9.43% from Thursday's close of $85.41 (THE DAILY).