Nike Fiscal Second Quarter Earnings Tops Street’s Estimate
Shares of Nike, Inc. (NYSE: NKE) leaped 4.75 percent in aftermarket trading on Thursday as the world’s largest athletic gear maker’s fiscal second quarter earnings topped Street’s estimates, thanks to robust demand from North America—notwithstanding an 18 percent drop in earnings from the previous year period, which the company said was due to fragile macroeconomic environment in Europe and slower pace of growth in China.
The Company also said that volatility in foreign-exchange market and higher labor costs offset higher selling prices and declining material costs.
For the quarter which ended November 30, Nike reported net income of $384 million or $1.14 a share, compared to $469 million or $1.03 a share, in the corresponding period of last year. [In the year earlier quarter it had 3 percent more common shares outstanding]
Revenue during the period jumped 7 percent to $5.96 billion.
Analysts polled by Thomson Reuters were expecting earnings of $1.00 a share on revenue of $5.99 billion.
The Company said that overall future orders climbed 6 percent during the quarter.
However, in North America, which is Nike’s biggest market, shoes and clothing, scheduled to be delivered between December 2012 and February 2013, also referred as to as future orders, climbed 14 percent in the quarter.
Addressing analysts and investors on a conference call, Nike’s Chief Executive, Mark Parker, said, “In North America, we created great momentum. This is somewhat counterintuitive to some, given this market size and assumed maturity. But I see tremendous growth potential in North America.”
Nevertheless, China, which is Nike’s fastest growing market is becoming a bit of concern for the company. Lately, Nike in China is grappling with excess inventory owing to increased completion. Moreover, distributors and retailers are cautious in stocking goods due to weakness in macroeconomic environment.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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