Nike Thursday reported “a 7 percent profit with net income increasing to $560 million and diluted earnings per share increasing 11 percent to $1.20,” according to Allan Brettman of the Portland OREGONIAN. Revenues “increased 15 percent to $5.8 billion; 16 percent on a currency-neutral basis.” Excluding the impacts of changes in foreign currency, Nike brand revenues “rose 16 percent with growth in every geography except Japan and in all key categories.” The sporting goods brand also reported that its “worldwide futures orders for products to be delivered from March through July totaled $9.4 billion.” That is 15% “higher than orders reported for the same period last year.” The apparent jump for the timeframe “could be attributed to Nike's taking over as the official provider of on-field apparel for the NFL.” Converse, Hurley, Nike Golf and Umbro all “grew compared to the prior year while Cole Haan was essentially flat to last year” (OREGONLIVE.com, 3/22). Bloomberg TV’s Julie Hyman said Nike “sales have been relatively robust, demand for the shoes has been relatively strong, especially in the company’s international markets which are key for Nike.” But on the “other hand, commodity costs have been rising and Nike actually told analysts and investors that its year-over-year gross margin would decline." Hyman: “The company has been raising prices. That’s also been helping it keep up with those commodity costs. The question is, did it raise them enough, did it also do some promotions that would have cut into the gross margins?” ("Bloomberg Bottom Line,” Bloomberg TV, 3/22). Stifel Nicolaus analyst Jim Duffy said he was “not looking for this quarter to necessarily to be a catalyst for the stock, but I am very comfortable recommending it over a 12-month period.” Duffy said the European debt crisis “is a headwind to demand, but one of the offsets” this year are the London Games and the UEFA European Championships “which creates an awful lot of excitement around sport and it drives demand for some of Nike’s specific products” (Fox Business, 3/22).
