Nike shares rise as it beats first-quarter earnings estimates

Nike shares rose the most in a year after the world's largest maker of athletic gear beat first-quarter earnings estimates, helped by higher prices and a lower tax rate.

Profit rose to $1.34 a share, excluding some items, the Oregon-based company said on Thursday in a statement.

Analysts estimated $1.19 on average, according to data compiled by Bloomberg.

Chief executive Mark Parker, who was tapped this year to succeed Nike co-founder Phil Knight as chairman, has expanded the shoemaker's offerings of women's apparel and bolstered its online operations.

The company also increased its gross profit margin last quarter, with help from higher selling prices, and benefited from broad-based revenue growth.

Nike’s effective tax rate was 18.4 per cent, compared with 21.7 per cent a year earlier.

"They've had a really nice run," said Rob Plaza, an analyst at Key Private Bank.

Investments the company has made in cutting production and distribution costs are paying off, and expanding the gross margin has been “a big driver of the stock”.

The shares rose as high as $125.20 yesterday in New York, the largest intraday gain since September last year.

First-quarter net income rose 23 per cent to $1.18 billion, or $1.34 a share, from $962 million, or $1.09, a year earlier. Revenue climbed 5.4 per cent to $8.41 billion in the period, which ended August 31st. That beat analysts’ $8.22 billion average estimate.

Mr Parker has solidified his role this year as successor to Mr Knight and the company’s long-term steward.

In June, Nike said that the 77-year-old Mr Knight had recommended that Mr Parker succeed him as chairman whenever he steps aside, which the company said was expected to happen in 2016.

The growth of futures orders in Europe, China, Japan and emerging markets also topped analysts’ projections last quarter. – (Bloomberg)