Nike Profit Tops Estimates as World Cup Gear Boosts Sales

By Matt Townsend

Nike Inc. (NKE), the world’s largest sporting-goods maker, posted first-quarter profit that topped analysts’ estimates after the FIFA World Cup soccer tournament boosted sales. The shares surged in late trading.
Net income in the quarter ended Aug. 31 rose 23 percent to $962 million, or $1.09 a share, from $779 million, or 86 cents, a year earlier, the Beaverton, Oregon-based company said yesterday in a statement. The average of 25 analysts’ estimates compiled by Bloomberg was 88 cents.
The World Cup, the world’s most-watched sporting event, took place in Brazil during the quarter, boosting interest in Nike’s soccer gear and apparel. U.S. consumers also have been buying more athletic apparel and footwear for everyday use, not just
when working out or playing sports.
“The results across the board are extremely impressive,” Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis, said in an interview. While the World Cup helped, “it’s more than that. The product is resonating with consumers. They are dominating and keep taking market share.”
The shares rose as much as 7.3 percent to $85.58 yesterday in late trading in New York. Nike had gained 1.4 percent this year through the close of regular trading, compared with a 6.4 percent increase for the Standard & Poor’s 500 Index.

Photographer: David Paul Morris/Bloomberg

A man carries a Nike Inc. shopping bag in San Francisco.

Orders Surge

Orders for the Nike brand for delivery from September through January rose 14 percent, excluding the effects of foreign-currency exchange-rate fluctuations. Analysts estimated a gain of 10 percent gain, on average, according to Consensus Metrix, a researcher owned by Wayne, New Jersey-based Kaul Advisory Group. The measure is closely watched because investors view it as a proxy for future sales.
In North America, Nike’s largest market, orders rose 15 percent, topping an estimate of 9.8 percent.
Earnings per share will advance about 20 percent this year, the company said on a conference call to discuss the results. Analysts had projected a gain of about 14 percent.
Total sales in the quarter rose 15 percent to $7.98 billion, surpassing analysts’ projections for $7.78 billion. While rival Adidas AG was the official sponsor of the World Cup, Nike spent heavily on its own campaign and building buzz for its gear.
Revenue in Nike’s Greater China unit increased 18 percent to $679 million. The company had been struggling to maintain growth there, its second-largest market, as shoppers became choosier about which brands they buy. Futures orders in the unit advanced 6 percent, trailing analysts’ projections for a 6.5 percent gain.
Adidas, the world’s second-largest sporting-goods maker, cut its annual profit forecast last month amid slumping demand for golf equipment and an increase in production and marketing costs. The company’s sales in the quarter ended June 30 rose 2.4 percent.