NEW YORK, Sept 27 — Nike Inc, the world’s largest sporting-goods maker, surged to a record high after its FIFA World Cup marketing campaign fuelled profit and sales.
First-quarter net income rose 23 per cent to US$962 million (RM3.17 billion), or US$1.09 a share, from US$779 million, or 86 cents, a year earlier, the Beaverton, Oregon-based company said on Thursday in a statement. The average of 25 analysts’ estimates compiled by Bloomberg was 88 cents.
The World Cup, the world’s most-watched sporting event, took place in Brazil during the quarter, boosting interest in Nike’s football gear and apparel. US consumers also have been buying more athletic apparel and footwear for everyday use, not just when working out or playing sports.
“The results across the board are extremely impressive,” Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis, said in an interview. While the World Cup helped, “it’s more than that. The product is resonating with consumers. They are dominating and keep taking market share.”
The shares rose 12 per cent to US$89.50 at the close in New York, reaching a new high. Nike has gained 14 per cent this year through today, compared with a 7.3 per cent increase for the Standard & Poor’s 500 Index.
Orders surge
Orders for the Nike brand for delivery from September through January rose 14 per cent, excluding the effects of foreign-currency exchange-rate fluctuations. Analysts estimated a gain of 10 per cent gain, on average, according to Consensus Metrix, a researcher owned by Wayne, New Jersey-based Kaul Advisory Group. The measure is closely watched because investors view it as a proxy for future sales.
In North America, Nike’s largest market, orders rose 15 per cent, topping an estimate of 9.8 per cent.
Earnings per share will advance about 20 per cent this year, the company said on a conference call to discuss the results. Analysts had projected a gain of about 14 per cent.
Total sales rose 15 per cent to US$7.98 billion in the first quarter, which ended Aug. 31. That surpassed analysts’ projections for US$7.78 billion. While rival Adidas AG was the official sponsor of the World Cup, Nike spent heavily on its own campaign and building buzz for its gear, boosting marketing by 23 per cent.
Nike now has the largest market share of revenue from cleats in the world’s nine largest football markets, the company said.
China growth
Revenue in Nike’s Greater China unit increased 18 per cent to US$679 million. The company had been struggling to maintain growth there, its second-largest market, as shoppers became choosier about which brands they buy. Futures orders in the unit advanced 6 per cent, trailing analysts’ projections for a 6.5 per cent gain.
Adidas, the world’s second-largest sporting-goods maker, cut its annual profit forecast last month amid slumping demand for golf equipment and an increase in production and marketing costs. The company’s sales in the quarter ended June 30 rose 2.4 per cent.
Nike backed away from a high-profile endorsement this month when it suspended a contract with Adrian Peterson, a National Football League running back who is charged with abusing his four-year-old son. Peterson is one of several NFL players confronting domestic-violence allegations. Nike didn’t discuss the situation yesterday, other than saying that NFL jerseys continue to sell well.
“We certainly see good growth in our NFL business,” Trevor Edwards, president of the Nike brand, said during the conference call. — Bloomberg
