Nike Shares Climb as Q4 Earnings and Sales Grow

niukeBeaverton, OR—Nike saw its share price climb after revealing an increase in fourth-quarter earnings and sales, boosted by growth in all key categories.

Despite the negative impact of changes in foreign exchange rates, Nike said Thursday that net income for the three months ended May 31 rose to $698 million, or 78 cents a share. That compares with net income of $662 million, or 76 cents a share, in the same quarter last year. Analysts expected 75 cents a share.

This was thanks to gross margin expansion of 170 bps to 45.6%, boosted by higher average selling prices and continued growth in the higher margin direct-to-consumer (DTC) business.

World Cup Beneficiary

Net revenue rose 11% to $7.43 billion from $6.7 billion, and topped analysts’ prediction of $7.34 billion. Revenue for the Nike brand increased 13% to $7 billion. Revenue rose in all geographic regions except Japan.

The company’s quarterly marketing costs rose 10% to $3 billion, partly due to the World Cup. In fact, Nike stands to gain a lot from the latest World Cup. For the first time Nike is sponsoring more national teams than Adidas.

Nike signed up soccer legends Cristiano Ronaldo, Neymar Jr., Eden Hazard and Wayne Rooney for commercials to promote its merchandise ahead of the much-watched event. Its “Winner Stays” commercial attracted more than 82 million views on YouTube.com.

The company said its marketing expenses rose 36 percent in the fourth quarter, mainly due to expenditure related to the World Cup.

“These results demonstrate the energy and excitement Nike brings to the market,” said President/CEO Mark Parker. “Our ability to relentlessly innovate for consumers drove our growth in FY14, and will continue to fuel it for years to come. And as we grow, we remain focused on managing all areas of our business to drive sustainable, profitable growth for our shareholders.”

In a good sign for the current quarter, B Nike said that orders for deliveries scheduled from June through November rose 11% compared with a year ago.

Nike shares rose 39 cents, or 0.5%, to close at $76.86 during trading Thursday.

 

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