Nike earnings top estimates, easing concerns about slowdown

A shopper carries a Nike shoe box in San Francisco, California, on June 17, 2016.
A shopper carries a Nike shoe box in San Francisco, California, on June 17, 2016.PHOTO: BLOOMBERG

NEW YORK (BLOOMBERG) - Nike posted second-quarter results that surpassed analysts' estimates, soothing concerns that the world's largest sports brand is losing ground to competitors such as Adidas and Under Armour.

Profit was 50 US cents a share in the period, which ended Nov 30, Nike said in a statement after the market closed on Tuesday (Dec 20). That compared with the 43-cent average of analysts' projections. Sales rose 6 per cent to US$8.2 billion, beating estimates for US$8.09 billion.

The results helped rebuff critics who warned that Under Armour and a resurgent Adidas were stealing Nike's market share, especially among US shoppers. Consumer demand globally helped fuel sales last quarter, especially in Western Europe, China and emerging markets. Lower selling and administrative expenses also helped bolster profit.

"We are well-positioned to carry our momentum into the back half of the fiscal year and beyond," said chief executive officer Mark Parker, 61.

The stock, which has been on pace for its first annual decline in eight years, rose as much as 5.6 per cent to US$54.70 in late trading.

Future orders, a key benchmark that investors have used to assess Nike's growth, gained 2 per cent, excluding currency. That missed the 5.3 per cent increase analysts were projecting. The figure fell 4 per cent in North America, compared with an estimate for a 1.5 per cent gain. Nike has tried to play down the significance of the figure, saying the orders aren't an adequate proxy for growth.

Excluding currency changes, Nike's revenue jumped 17 per cent in the greater China region. It gained 13 per cent in emerging markets and 12 per cent in Western Europe. North America, Nike's biggest market, rose 3 per cent.

Nike also repurchased 17 million shares in the second quarter, part of a US$12 billion buyback program approved by the board last year. A total of 56 million shares have been repurchased as of the end of the last quarter.