Nike (NYSE: NKE), the world's largest athletic shoes and apparel maker, reported a 40 percent jump in income helped by higher average selling prices and an increase in revenue for its international business. Improved sales across all product types, regions and categories contributed to the rise in sales at Nike Brand, while its Converse division benefited from strong sales in the U.K., North America and China.
The Beaverton, Oregon-based company said it earned $537 million, or 59 cents per share, in the second quarter, up from a net income of $384 million, or 57 cents per share, last year. Analysts had called for EPS of 58 cents.
Revenue rose 8 percent to $6.4 billion, slightly under Wall Street's prediction of $6.44 billion. Gross margins expanded to 43.9 percent from 42.5 percent, benefiting from a shift of the company's revenue to higher-margin products and businesses, higher average prices, and continued growth in the higher-margin direct-to-consumer business.
Nike brand revenue from North America climbed 9 percent year-over-year and Western Europe grew 18 percent. Among smaller markets, revenue in Central and Eastern Europe spiked 17 percent and China was up 8 percent. Sales in Japan slid 13 percent.
Looking ahead, Nike is readying for three major athletic events in 2014, the Super Bowl, World Cup and Olympics. In a call with analysts Thursday, CEO Mark Parker said Nike has introduced its Brazilian and French World Cup uniforms, known as "kits," that are using new technology to be 16 percent lighter than the uniforms made for the 2012 Euro Championships. They're made of recycled polyester that use the equivalent of 18 recycled water bottles in every uniform.
Nike projects revenue to grow in the high-single digit to low-double digit range for the third quarter and in the low double-digit range in the fourth quarter. As a result, fiscal 2014 revenue is expected in the high-single to low-double digit range.
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