Nike Sales Rise 4.8%

By Tess Stynes 

Nike Inc. said its sales rose 4.8% as the athletic-gear maker recorded revenue growth across most of its geographic markets and product lines during the quarter ended in May.

However, continued pressure from a stronger dollar again weighed on revenue growth and future orders.

Shares rose 2.6% to $107.95 in recent after-hours trading Thursday as earnings beat analysts' expectations.

For the period ended May 31, the athletic gear maker's revenue increased to $7.78 billion from $7.43 billion a year earlier. Excluding the impact of a stronger dollar, sales improved 13%.

Analysts polled by Thomson Reuters expected a revenue increase of 4% to $7.69 billion. The Beaverton, Ore., company had expected an increase in revenue excluding currency impacts in the low double-digits on a percentage basis, with reported revenue growth eight percentage points to nine percentage points lower.

While Nike derives most of its income from North America and footwear, more than half of its sales are further afield, where economic and foreign-exchange pressures could hurt the company's revenue and margins.

World-wide orders of Nike apparel and footwear for delivery from June through November grew 2% from a year earlier, including currency changes. That is well below the 11% increase that the company reported for the year-earlier period but unchanged from the last quarter. Excluding currency fluctuations, future orders rose 13% from a year ago.

Overall, Nike reported a profit of $865 million, or 98 cents a share, up from $698 million, or 78 cents a share, a year earlier. Analysts expected per-share profit of 83 cents.

Gross margin rose to 46.2% from 45.6%, mostly on higher prices and continued growth in its higher-margin direct-to consumer business.

The company's effective tax rate was 17.8% in the latest quarter, compared with 23.5% a year earlier.

Nike has used expensive sponsorships to increase its market share in sports such as soccer and basketball. In the latest period, Nike reduced such spending--called demand creation--by 6.5% to $819 million. The decrease reflected higher expenses related to marketing support for the 2014 World Cup in the year-earlier period.

Write to Tess Stynes at [e-mail]

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