Nike 1st-quarter net income jumps on demand, pipeline for orders strong

Nike 1st-quarter net income up 9 percent

PORTLAND, Ore. — Nike Inc. held its lead among competitors on Thursday, reporting a solid first quarter and strong orders for the upcoming season.

The world’s largest athletic shoe and clothing company, based in Beaverton, Ore., earned $599 million, or $1.14 per share for the quarter that ended Aug. 31. That’s up 9 percent from the $513 million, or $1.04 per share, earned last year.

Revenue rose 8 percent to $5.18 billion, with gains in all of its categories, affiliates and nearly every market.

CEO Mark Parker said the results are a great start to the year and demonstrate Nike’s tremendous growth potential. The evidence seemed to support him: Nike said orders from retailers for the coming season rose 10 percent — or 13 percent, excluding the impacts of currency fluctuations — its biggest increase in over a decade.

The news sent Nike shares soaring to new highs after hours. Investors watch Nike’s future orders closely as they are an indicator of retailers’ expectations and the company’s potential for the near term.

“We have the hunger to seek and develop the new ideas and inspiration that allow us to innovate and ultimately surprise and delight,” Parker said. “That’s why we are not guided by the vagaries of the macro economy. We’re guided by our own potential, and that potential has never been greater.”

Nike executives said strong demand, tight inventory controls and improved margins outweighed the impact of currency fluctuations and increases in freight and other costs during the quarter.

Demand seemed strong around the globe. Revenue jumped 8 percent in North America, Nike’s largest market; 11 percent in China, its second-largest market and 30 percent in other emerging markets, taken together. The only notable decline came in Japan, where revenue fell 12 percent.

The results move the company closer to its long-term goal, announced this spring, of increasing its revenue to $27 billion by 2015, up from $19 billion in its most recent fiscal year. Company leaders reiterated the goal at an annual meeting this week.

Nike leaders said the company faces many of the same headwinds in the second half of the year: raw materials, energy, labor and transportation costs, as well as fluctuations in foreign exchange rates. But they said Nike has demonstrated its strength and expects to continue to navigate those challenges successfully.

The results beat analyst expectations for net income of $1.01 per share and fell just shy of expectations for revenue of $5.22 billion, according to a poll by Thomson Reuters.

Shares rose $3.79, roughly 5 percent, to $81.46 in after-hours trading, surpassing the company’s 52-week high of $79.04.