Nike leaps on higher sales and future orders
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Better than expected fiscal third-quarter earnings and future orders lifted Nike shares on Friday.
Goods for delivery between March and July rose 11 per cent in constant currencies buoyed by the trend among US consumers to wear athletic apparel outside the gym.
Wall Street analysts had forecast that the measure, a leading indicator of the company’s future results, would advance 9.9 per cent. Including currency changes, however, reported orders climbed 2 per cent.
For the three months to the end of February Nike reported profits of $791m, or 89 cents per share, compared with $682m, or 75 cents a share. Sales climbed 7 per cent to $7.5bn.
Analysts on Wall Street expected the athletic apparel and footwear maker to report earnings of 84 cents a share, on sales of $7.6bn.
Sales in the US — which accounted for 47 per cent of revenues last year — rose 6 per cent from a year earlier to $3.3bn. Future sales orders for the region advanced 15 per cent, ahead of expectations for an 11.5 per cent rise.
Dollar strength hurt the results, however, as Nike, which is based in Beaverton, Oregon, said the value of its sales in Europe would have increased 21 per cent, rather than the 10 per cent it reported, had it not been for the dollar’s rise against the euro.
“We are encouraged to see Nike deliver more than 14 per cent earnings before interest and tax growth in its core Nike brand business in the face of significant currency headwinds, choppy consumer trends in key markets (Brazil, China, Japan, eastern Europe) and the sustained period of strength in North America, where the brand is most mature,” said Lindsay Drucker Mann, an analyst at Goldman Sachs.
Shares of Nike, which have climbed 29 per cent in the past year, gained 3.7 per cent to $101.98.
Biogen was the best performer on the benchmark S&P 500, after a study showed that its Alzheimer’s drug, Aducanumab, slowed a patient’s cognitive decline with a statistically significant reduction in the build-up of amyloid plaque, believed to play a key role in the development of symptoms.
Shares in Biogen, which is based in Cambridge, Massachusetts, climbed nearly 10 per cent to $475.98.
Tiffany shares fell 4 per cent to $82.93, after the luxury retailer said it expected a 30 per cent decline in first-quarter net earnings and “a more modest decline in the second quarter”.
The warning accompanied fourth-quarter profits that topped forecasts. Tiffany reported earnings of $196.2m, or $1.51 a share, on sales of $1.29bn. Wall Street had estimated earnings of $1.50 a share on sales of $1.3bn.
“Longer term, we believe Tiffany’s growth prospects are favourable given its dominant position in the global luxury category and global diversification,” said Randall J Konik, an analyst at Jefferies. “However, there will probably be some volatility in fundamental performance in the near term due to global economic uncertainty and a strong US dollar.”
US stocks rallied as the dollar weakened and the Nasdaq Composite approached a record closing high.
The S&P 500 gained 0.9 per cent to 2,108.06, the Dow Jones Industrial Average advanced 0.9 per cent to 18,127.65, and the Nasdaq Composite climbed 0.7 per cent to 5,026.42.
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