Nike profit up on strong sales of high-margin shoes, apparel

Nike, the world's largest footwear maker, reported a better-than-expected profit for the eighth quarter in a row as it sold more high margin basketball shoes and apparel at higher prices.

The company’s shares were up 2.3 per cent at $107.63 in trading after the bell on Thursday.

Nike’s higher-margin Jordan, LeBron, Kobe and KD basketball shoe brands have been especially popular in the US, helping drive sales of the company’s footwear division.

The company's running shoe brands, which include Lunar, Free, Flyknit, Roshe Run, Huarache and Max Air, have also seen growing demand.

Sales of higher priced merchandise and growth in its direct-to-consumer business helped gross margins rise 60 basis points to 46.2 per cent in the fourth quarter ended May 31st, Nike said.

The company’s DTC business, which includes owned stores and its internet business, grew 25 per cent in the financial year.

Nike has been hiking investments in its DTC business, as it gets higher margins from sales through the channel.

The company typically sells new designs and limited edition footwear through the business and prices them higher than it does in other channels such as third-party retail stores.

Nike said orders for its branded shoes and clothing scheduled for delivery from June through November rose 13 per cent in the quarter, excluding the impact of currency fluctuations.

The company’s net income rose 24 per cent to $865 million, or 98 cents per share, while revenue rose 4.8 per cent to $7.78 billion.

Revenue from North America, Nike’s largest market, rose 13 per cent, mostly due to higher sales of footwear and apparel. Sales at of footwear, the largest source of revenue for Nike, rose 8.6 per cent.

Analysts on average had expected earnings of 83 cents per share, on revenue of $7.69 billion, according to Thomson Reuters I/B/E/S.

Reuters