By Tess Stynes
Nike Inc. said its sales surged 15% for the quarter ended
November, exceeding expectations, but shares of the athletic
apparel maker slid amid concerns about future growth.
Nike's future orders, an indicator of coming growth, rose 7% in
the latest quarter, or 11% excluding currency fluctuations. The
future orders are for Nike-branded footwear and apparel deliveries
set for December through April. The rates represent a decrease from
the August quarter, when its futures orders were up 11%, or 14%
excluding currency changes.
Future orders don't necessarily reflect actual revenue growth,
but the metric is closely followed by analysts.
Shares fell 2.5% to $94.65 in recent after-hours trading. The
stock has risen 24% over the past year through Thursday's close and
hit an all-time high of $99.76 on Nov. 28.
Chief Executive Mark Parker had commented in September that Nike
could benefit from the popularity of athletically styled footwear
and clothes with consumers that aren't necessarily planning a
workout. Such athletic styles have been crossing over to casual
wear and even workplace attire--a fashion trend some call
"athleisure."
For the three months ended Nov. 30, Nike's overall sales reached
$7.38 billion, while analysts polled by Thomson Reuters recently
expected $7.15 billion. Nike brand sales increased 15% to $7
billion, on broad growth across its products and geographic
markets.
Nike still derives the majority of its income from North America
and footwear. However, more than half of its sales are further
afield, where economic and foreign-exchange pressures could hurt
the company's revenue and margins.
In North America, where Nike dominates the market, Nike brand
sales grew 16%. In key markets with potential for growth such as
Western Europe, home of Nike's chief rival Adidas AG, Nike brand
sales climbed 22%. In Greater China, Nike brand sales climbed
21%.
Nike's future orders, an indicator of coming growth, rose 7% in
the latest quarter, or 11% excluding currency fluctuations. The
future orders are for Nike-branded footwear and apparel deliveries
set for December through April, but don't necessarily reflect
actual revenue growth. Still, the metric is closely followed by
analysts.
Excluding currency fluctuation, future orders increased 13% each
in its North America, Western Europe and China segments.
For the period ended Nov. 30, Nike reported a profit of $655
million, or 74 cents a share, up from $534 million, or 59 cents a
share, a year earlier. Analysts expected per-share profit of 70
cents.
Gross margin rose to 45.1% from 43.9%, mostly owing to an
increase in the portion of higher-margin products.
Nike has used expensive sponsorships to increase its market
share in sports such as soccer and basketball. In the latest
period, such costs boosted spending for what Nike calls "demand
creation" increased 11% to $766 million.
Write to Tess Stynes at tess.stynes@wsj.com
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