Nike grows future orders as Q2 earnings climb
- Q2 earnings up 20% to US$785m
- Gross margin widens 50 basis points
- Group sales increase 4% to $7.7bn
Nike saw earnings and sales grow in its second-quarter
Sporting goods giant Nike reported higher future orders in its second-quarter thanks to strong demand from China and Japan, and saw growth in both earnings and sales.
Net income in the three months to the end of November was up 20% to US$785m from $655m in the same period a year earlier. Gross margin widened 50 basis points to 45.6% due to higher average selling prices, partially offset by higher product input costs and unfavourable changes in foreign exchange rates.
Group sales increased 4% to $7.67bn on a reported basis, and were up 12% on a currency neutral basis.
Nike brand sales grew 13% to $7.3bn on a currency neutral basis, driven by double-digit growth in every geography and most key categories. Converse revenues, however, were down 5% to $398m as strong growth in North America was more than offset by a decline in Europe.
Revenues in North America, Nike's largest market, were up 9% in the quarter to $3.55bn, while Greater China sales rose 24% to $938m thanks to revamped stores and greater online traffic. Western Europe revenues, however, were down 1% to $1.30bn.
Worldwide futures orders for the Nike brand, scheduled for delivery from December through to April, were up 20%, excluding currency. This was led by a 31% hike in future orders from China, and a 32% jump from Japan.
"Our strong Q2 growth and profitability show that Nike continues to drive real momentum through the category offense – by going deep with consumers by sport and serving them completely," said CEO Mark Parker. "And our powerful global portfolio of businesses, combined with strong financial discipline, continue to drive significant shareholder value. We see tremendous opportunity ahead as we enter an Olympic and European Championships year with a full pipeline of inspiring innovation for athletes everywhere."
FBR & Co analyst Susan Anderson, noted: "Nike continues to resound extremely well in a growing women's activewear market. Management is excited about the growth opportunity in women's basketball. Nike-sponsored athlete Elena Delle Donne won the WNBA's MVP in 2Q, just before the launch of the new women's basketball collection. The sell-through has reportedly been beyond strong. With women making up roughly 40% of all basketball players, we believe this is yet another large growth opportunity for Nike."
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