Nike’s 4th-quarter profit tops estimates

Nike, the world’s largest sporting-goods company, posted fiscal fourth-quarter profit that topped analysts’ estimates as running shoes propelled revenue gains in the United States.

Net income in the quarter ended May 31 rose 22 percent to $668 million, or 73 cents a share, from $549 million, or 59 cents, a year earlier, Beaverton, Ore.-based Nike said Thursday in a statement. Excluding units sold, profit of 76 cents a share exceeded the 74-cent average projection compiled by Bloomberg.

Nike has been benefiting from increasing demand for running and basketball gear in North America, its largest market. In China, by contrast, consumers shunned apparel that didn’t have the right fit or sophistication, forcing Nike to use discounts. Worldwide sales gained 7.4 percent to $6.7 billion, topping estimates.

“It’s a good quarter, but not a blowout,” Chris Svezia, an analyst for Susquehanna Financial Group in New York, said in an interview. He rates the stock neutral.

Orders for the Nike brand from June to November, excluding the effects of currency exchange-rate changes, advanced 8 percent. Analysts projected a gain of 8.8 percent, the average of five estimates compiled by Bloomberg. Orders on that basis advanced 12 percent a year earlier.

The company’s business in China looks like it’s “still a work in progress,” Svezia said after orders there were little changed. “There was some hope that they were turning the corner.”

In China, which had been one of Nike’s fastest-growing markets, sales excluding currency fluctuations fell 1 percent, the third quarterly decline in a row. The company has blamed the deterioration on a slowing Chinese economy and the discounts. In May, Nike replaced its top executive in the country.

Nike has been working to improve its profitability amid higher costs for materials and labor, mostly in China. To combat that, the company increased prices last year and has been cutting waste out of its supply chain. It also sold off the under-performing Cole Haan and Umbro brands last year.

As a result, gross margin, or the percentage of sales left after subtracting the cost of goods sold, widened to 43.9 percent from 42.8 percent a year earlier. That marked the second straight gain after nine consecutive declines. The company forecast an expansion of 0.5 percentage points.

Last week Nike announced management changes that included repositioning several current executives and the retirement of Charlie Denson, its second-in-command. Denson, president of the Nike brand, is leaving July 1 after 34 years. Gary DeStefano, president of global operations and a 31-year veteran, is also retiring next month.

More in Herald Business Journal

Exec director of Future of Flight in Mukilteo stepping down

A former board president will temporarily lead Snohomish County’s most popular tourism attraction.

Seafood producer Keyport moves corporate HQ to Edmonds

The family business sees the city as business friendly — and able to accommodate expansion.

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Amazon opens store with no cashiers, lines or registers

The Seattle store allows shoppers to use a smartphone app to pay for items they want.

Trump hits solar panels, washing machines with tariffs

The administration cast the decisions as part of his pledge to put American companies and jobs first.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

Top CEOs take 4 days to earn a Bangladesh worker’s life pay

Oxfam has sought to put inequality at the heart of this week’s deliberations of the rich and powerful.

Most Read