For the quarter ended Feb. 28, Nike said net profits were up 16% to $662 million, or 73 cents a share, compared to $569 million, or 61 cents a share, a year ago. Analysts’ average estimate was for only 67 cents a share.
Net revenues increased 9.4% to $6.2 billion.
What had the market so excited apparently was Nike’s news that its sales in China had increased, instead of declined as analysts expected. Though sales had declined 10% in China, the company said there were signs of improvement, namely Nike brand orders increased 3% for fourth quarter (analysts expected a 4.3% decline in orders from China).
During the third quarter, Nike put old stock on discount to clear inventory to help revive growth. Nike had earlier blamed the slowdown in China on the country’s slowing economy and a glut of apparel.
Gross margin increased 30 basis points to 44.2% from 43.9%, due to increased prices that countered rising material and labor costs.
By region, North America, the company’s biggest market, had 18% growth. Revenues from Western Europe, which has been going through a debt crisis, rose 8% while sales from Central and Eastern Europe grew 13%.
The company also issued optimistic forecasts for fiscal 2014 that were in line with Wall Street expectations. Analysts’ estimate 14% earnings growth and a 7% increase in sales next year.
“Our team delivered strong results in Q3. We did it with a relentless flow of innovation into our key categories,” said Mark Parker, president/ceo. “Given the diversity of our portfolio, we’re able to capture big opportunities that drive sustainable, profitable growth. At the same time we continue to invest in new ways to enhance athletic performance, build strong consumer communities, and improve how we design and manufacture our products.”