Nike Earnings in Line With Estimates; Outlook Bright

Nike Earnings in Line With Estimates;
Nike Free Hyperfeel

Nike Inc. CEO Mark Parker said he expects sales of the company’s basketball, football and running shoes to benefit from a bevy of global sporting events in 2014, as the athletic giant continues to make strides with the reset of its China business.

“Next year we have the Super Bowl, the Winter Olympics and World Cup. At Nike, events like these are inspiration points for us,” Parker said during a call with analysts following the firm’s second-quarter earnings release.

Strong demand for Nike-branded products drove an 8 percent lift in the company’s quarterly sales to $6.4 billion, in line with analysts’ consensus forecasts, but the result was offset by unfavorable exchange rates and higher labor input costs. The Beaverton, Ore.-based firm said net income rose 3 percent to $537 millio from the prior corresponding period.

Parker cited the upcoming World Cup in Brazil as one of the drivers behind the better-than-expected 12 percent lift in global future orders for Nike-branded athletic footwear and apparel scheduled for delivery from December 2013 through April 2014. Orders totaled $10.4 billion. He said the company has several product launches planned for next year based around key global sporting events. 

“Our strong second-quarter results show why Nike leads the industry,” Parker said in the call. “Our powerful portfolio fuels growth across our categories and geographies. Because we never stop innovating, we enhance our ability to serve the athlete, inspire consumers and elevate the marketplace.”

Globally, sales for Nike brand products rose 7 percent to $6.1 billion. Converse sales increased 14 percent, reaching $360 million.

Nike Brand President Trevor Edwards said on the call that the company is starting to see progress in the turnaround of its China business, and that the Western European and North American businesses are performing strongly.

“We continue to work with wholesale partners to create a more seamless operating platform [in China],” Edwards said. “While we are still early in the reset process, the results are very encouraging.”