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Nike's future orders disappoint
By Ben Klayman |
December 23, 2010, Thursday
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Print Edition
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NIKE Inc has posted future orders data that missed many analysts' expectations, sending shares of the world's largest athletic shoe and clothing maker down almost 6 percent.
Nike also said it might undertake some targeted price increases to help offset rising cotton costs.
Future orders, excluding currency exchange rates - a key measure of sales growth - rose 11 percent.
"They didn't beat rising expectations for future orders and that's why the stock's down," said John Fisher, portfolio manager with Fifth Third Asset Management.
Wall Street was looking for future orders growth of 12 to 13 percent, he said.
Nike executives repeated comments made in the previous quarter that rising cotton, labor and transport costs would hurt profit margins in the second half of the fiscal year despite rising demand.
They said the cost pressures would ease over the next 12 to 18 months.
"As supply and demand find a new normal in the recovering economy, our industry is going to experience margin pressure due to rising input costs," Nike Chief Executive Mark Parker said.
Nike's net income in the fiscal second quarter rose 22 percent to US$457 million, or 94 cents a share, from US$375 million, or 76 cents a share, in the year-earlier period. Sales in the quarter ended November 30 rose 10 percent to US$4.84 billion, above the US$4.81 billion analysts had expected. Excluding currency fluctuations, revenue rose 11 percent.
By region, revenue in Nike's largest market, North America, increased 14 percent to US$1.7 billion, while sales in emerging markets and China rose 24 percent and 20 percent, respectively.
Orders for Nike brand shoes and apparel scheduled for delivery from December 2010 to the end of April next year totaled US$7.7 billion.
However, the 11 percent rise in orders from a year ago, which included minimal impact due to currency effects, had disappointed many analysts.
Nike also said it might undertake some targeted price increases to help offset rising cotton costs.
Future orders, excluding currency exchange rates - a key measure of sales growth - rose 11 percent.
"They didn't beat rising expectations for future orders and that's why the stock's down," said John Fisher, portfolio manager with Fifth Third Asset Management.
Wall Street was looking for future orders growth of 12 to 13 percent, he said.
Nike executives repeated comments made in the previous quarter that rising cotton, labor and transport costs would hurt profit margins in the second half of the fiscal year despite rising demand.
They said the cost pressures would ease over the next 12 to 18 months.
"As supply and demand find a new normal in the recovering economy, our industry is going to experience margin pressure due to rising input costs," Nike Chief Executive Mark Parker said.
Nike's net income in the fiscal second quarter rose 22 percent to US$457 million, or 94 cents a share, from US$375 million, or 76 cents a share, in the year-earlier period. Sales in the quarter ended November 30 rose 10 percent to US$4.84 billion, above the US$4.81 billion analysts had expected. Excluding currency fluctuations, revenue rose 11 percent.
By region, revenue in Nike's largest market, North America, increased 14 percent to US$1.7 billion, while sales in emerging markets and China rose 24 percent and 20 percent, respectively.
Orders for Nike brand shoes and apparel scheduled for delivery from December 2010 to the end of April next year totaled US$7.7 billion.
However, the 11 percent rise in orders from a year ago, which included minimal impact due to currency effects, had disappointed many analysts.
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