Saturday, June 25, 2011

Nike Inc. (NYSE: NKE): Q4 Earnings Preview 2011

Nike Inc. (NYSE: NKE), the world’s largest athletic apparel and footwear maker, is scheduled to release its fiscal third-quarter financial results after the closing bell on Monday, June 27, 2011. Analysts, on average, expect the company to report earnings of $1.16 per share on revenue of $5.54 billion. In the year ago quarter, the company reported earnings of $1.06 per share on revenue of $5.08 billion.

Nike, Inc. designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children worldwide. It is a seller of athletic footwear and athletic apparel in the world. Nike's business operations are divided into four major segments, with Footwear being the leading revenue contributor at 55 percent, followed by Apparel at 26 percent, Equipment with 5 percent, and Other's contributing 14 percent to the total revenue.

In the preceding fiscal third quarter, the Beaverton, Oregon-based company's net income was $523 million, or $1.08 per share, compared to $497 million, or $1.02 per share, in the year-ago quarter. Revenues rose 7 percent to $5.08 billion from $4.73 billion last year. Analysts, on average, expected the company to report earnings of $1.11 per share on revenue of $5.16 billion.

Last year, the company unveiled its strategy for long-term growth across its global portfolio of brands and businesses, indicating its main financial objectives through 2015 to include high single-digit revenue growth, mid-teens earnings per share growth, and a return on invested capital of 25%. The company's target included revenues of $27 billion by the end of fiscal 2015 based on growth expectations across its portfolio, like the Nike Brand, Cole Haan, Converse, Hurley, Jordan Brand, Nike Golf and Umbro.

The company continues to contain costs by improving supply chain efficiencies and other cost reduction programs. Nike has performed well in the last year, gaining over 9%, and looks to continue to grow its business by diving into the action sports arena. Action sports like skateboarding are the fastest growing category in the Nike brand, and Nike may look to focus on growing that category further.

The footwear industry is among several in the retail sector benefitting from a recent uptick in in overall employment and consumer spending. The back to school season at the end of summer could be a great opportunity for companies in the footwear sector, especially athletic and casual footwear, to generate sales and hopefully continue momentum into the end of the year. 

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