By Sara Germano And Tess Stynes
Nike Inc. reported strong sales growth, but a dip in future
orders coupled with underwhelming margin expansion tempered the
outlook for the world's biggest sportswear maker.
World-wide orders of Nike apparel and footwear for delivery
between December 2014 and April 2015 grew 7%, including currency
changes, from the year prior. That is slower than both the 12%
growth the Beaverton, Ore.-based company reported the same period a
year ago and the 11% growth reported last quarter.
Chief Financial Officer Don Blair said part of the slowdown was
attributable to tough comparisons from last year, when demand
surged ahead of the summer's World Cup. Excluding current
comparisons of soccer products, he said, total Nike future orders
were in line with those from last quarter.
"As long as we don't see huge moves in the macroeconomics, we
believe that we can continue to generate growth in the business,"
Mr. Blair said.
The future orders don't necessarily reflect actual revenue
growth, though the metric is closely followed by analysts looking
for insight into the world-wide appetite for Nike's products.
Nike still derives the majority of its income from North America
and footwear. However, more than half of its sales are further
afield, where economic and foreign-exchange pressures could hurt
the company's revenue and margins.
The tempered future orders, coupled with margin expansion that
fell short of Wall Street expectations, sent aftermarket shares
sliding about 3% on Thursday. The stock has risen 24% over the past
year through Thursday's close. Gross margins rose to 45.1% for the
three months ended Nov. 30 from 43.9% a year ago.
Sales gained 15% from a year ago to $7.38 billion for the
period. Profits increased 23% to $655 million.
Still, the company continues to benefit from broader cultural
trends that favor its products, including the rise of athletically
styled footwear and clothes among consumers that aren't necessarily
planning a workout. Such athletic styles have been crossing over to
casual wear and even workplace attire--a fashion trend some call
"athleisure." Top-growing categories for Nike include basketball
and women's wear.
Further, Nike said that average selling prices of future orders
rose 6%, meaning that wholesalers and, in turn, consumers are still
willing to pay more for the company's products.
Write to Sara Germano at sara.germano@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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