Thursday, June 24, 2010

Nike Q4 Earnings Meets View

Nike Inc. (NKE: 69.57 -2.95 -4.07%) recorded robust fiscal 2010 fourth-quarter earnings that rose 53% to $521.9 million or $1.06 per share from $341.4 million or 70 cents per share in the year-ago quarter. Quarterly earnings matched the Zacks Consensus Estimate, which moved up a penny in just the past week as 5 of 18 covering analysts raised expectations. 
Quarterly Details 
Despite macroeconomic headwinds, Nike’s total revenues grew 8% to $5.1 billion from $4.7 billion in the prior year quarter. The company continued to benefit from its strategy of consistently focusing on innovative products that provide a competitive edge over rivals. 
During the quarter, Nike witnessed revenue growth across all geographic regions, except Japan. Revenue growth was primarily led by Emerging Markets, which rose 47% year-over-year, followed by growth in China, Central and Eastern Europe, North America and Western Europe of 12%, 9%, 4% and 2%, respectively. 
Nike’s quarterly gross profit grew 18% year-over-year to $2.4 billion, while gross margin expanded 400 basis points (bps) to 47.4%. The solid growth was due primarily to higher in-line product margins, favorable product mix and reduction in discounted close-out sales. Global inventories fell 13% year-over-year to $2.0 billion, mainly due to prudent inventory management policies and efforts to align merchandise mix in-line with sales trends. 
Nike ended the quarter with cash and equivalents of $3.1 billion, and a healthy long-term debt-to-capitalization ratio of 4.4%, compared to a cash balance of $2.3 billion and long-term debt-to-capitalization ratio of 5.1% in the year-ago period. During the quarter, the company repurchased 2.9 million shares for about $216 million as part of its four-year $5 billion program approved in September 2008. 
Future Orders 
Nike reported an increase in future orders scheduled for delivery from June through November 2010, which increased 7% year-over-year to $8.8 billion. Future orders measure customer orders scheduled for delivery in the coming season and are a widely used metric to gauge the performance of retailers. 
Moving forward, Nike is expected to benefit from its significant brand presence through the ongoing soccer World Cup and the upcoming World Basketball Festival in New York. The company expects revenue to increase by a high single-digit rate in fiscal 2011 and by a low double-digit rate in the first quarter of the same fiscal, both excluding currency impacts. 
However, Nike also stated that both top and bottom-line performance in fiscal 2011 is likely to come under pressure from unfavorable currency translations, and rising costs of raw materials, labor and freight.

No comments: