Nike Q2 Up

Nike Inc.’s second-quarter income surged, and the firm saw continued strength from North America, greater China and the emerging markets.
For the period ended Nov. 30, the Beaverton, Ore.-based athletic giant earned a net income of $457 million, up 22 percent from $375 million in the same period a year ago, while net sales advanced 10 percent to $4.8 billion for the quarter.
Earnings per share were 94 cents, up 24 percent from a year earlier, reflecting revenue growth, higher gross margins and a slightly lower share count as the firm repurchased 3.5 million shares for approximately $280 million during the quarter.
Nike blasted past analysts’ estimates, which were EPS of 88 cents on revenue of $4.81 billion as polled by Yahoo! Finance.
“Almost every brand, category and geography delivered growth,” said Mark Parker, president and CEO of Nike, in a statement, adding that “going forward, we’re in the enviable position of having far more opportunities than challenges.”
Futures orders for footwear and apparel, scheduled for delivery through April 2011, totaled $7.7 billion, up 11 percent from the same period last year with minimal impact from changes in foreign currency exchange rates.
By region, futures orders from North America were strongest in the quarter, upping 16 percent. Futures orders from the emerging markets increased 15 percent, and from greater China 14 percent.
While Nike improved its second-quarter gross margin by 80 basis points, the firm’s VP and CFO said on a call with analysts that “we will face strong gross margin headwinds [going forward]. The combination of rapidly recovering demands and reductions in supply have driven higher costs for labor and cotton, as well as higher transportation costs as companies work to meet demand.
“[But] the strength of our brands and business model give us greater ability to offset these headwinds, and we do expect them to moderate as supply and demand come into balance and as economic fundamentals again drive the currency markets,” he added.
Nike ended the quarter with cash and cash equivalents of $1.77 billion and reduced its long-term debt to $338 million.

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