Nike Surpasses Estimates

Nike Surpasses Estimates
Men’s training shoe from NIKE

Nike Inc. handily topped estimates in the fourth quarter, rounding out a year of increasing momentum in its business.

For the period ended May 31, 2011, the athletic giant, based in Beaverton, Ore., earned a net income of $594 million, or $1.24 a share, a 14 percent increase from $522 million, or $1.06, in the same period a year ago.

Revenue advanced 14 percent to $5.8 billion, from $5.1 billion. Analysts were looking for earnings per share of $1.16 on revenue of $5.5 billion, as polled by Yahoo Finance.

Futures orders for delivery between June and November 2011 also grew 15 percent from last year, while inventories as of May 31, 2011, were up 33 percent.

Excluding the impact of changes in currency exchange rates, Nike brand’s revenues were higher in all product categories and in every region except Japan.

“We delivered exceptional results in extraordinary times [and] continue to deliver compelling innovation to athletes and consumers, and strong returns for our shareholders. The global appetite for sports has never been stronger,” said Mark Parker, president and CEO of Nike.

Selling and administrative expenses, which grew at a slower rate than revenue, increasing 6 percent to $6.7 billion, also helped fatten the top and bottom lines. Gross margin, however, declined 70 basis points to 45.6 percent, mainly due to higher product costs, which were in turn partly due to elevated freight costs.

For the full year, Nike’s net income grew 12 percent to $2.1 billion, or $4.39 a share. Revenue advanced 10 percent to $20.9 billion.

The firm ended the year with cash and cash equivalents of $2 billion, down 33 percent from $3 billion last year. It also reduced its long-term debt by 38 percent, to $276 million. 

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