Most Recent Articles In Business
Latest Business Articles
- Pensole Issues Shares To Grow
- The Disrupter: Q&A With Adidas America's Mark King
- EXCLUSIVE: Sperry, Keds Get New Execs
More Articles By
LOS ANGELES — Despite a drop in earnings and futures orders, analysts last week applauded Nike’s ability to weather the economic storm.
“While futures were shy of expectations, fears of a more dramatic fall-off (due to destocking, order cancellations and a collapse of emerging markets) have been dispelled, suggesting Nike continues to outpace both the market and the competition,” Jim Duffy, an analyst at Thomas Weisel Partners, wrote in an earnings note.
Christopher Svezia, of Susquehanna Financial Group, said that despite the current challenges, Nike is on the right track.
“We continue to believe that Nike’s dominant U.S. market share position in athletic footwear, its well-diversified brand portfolio, its growing presence in developing markets, and its strong financial position should allow the company to better navigate current difficult macro conditions than many of its competitors,” he wrote in an earnings note.
The company reported that earnings for its third quarter ended Feb. 28 fell 47 percent to $243.8 million, or 50 cents per diluted share, compared with $463.8 million, or 92 cents, during the same year-ago quarter. Sales declined 2 percent to $4.4 billion, versus $4.5 billion for the same period last year. According to the firm, the revenue decline was the result of the U.S. dollar’s strength against other currencies.
The company also reported that futures orders scheduled for delivery from March through July are 10 percent lower than it announced during the same time frame last year. Leading the decline is a 25 percent drop in orders from the company’s Europe, Middle East and Africa region. Orders in the U.S. and Asia Pacific regions each declined 1 percent.
Looking ahead, Nike said market challenges, including a stronger dollar, would likely send revenues below prior-year levels for the first two quarters of fiscal 2010.
But Nike Brand President Charlie Denson said during a conference call that new opportunities should emerge as the economy steers consumers toward more trusted brand names. “The bottom line is the strength of the Nike brand has never been more obvious or more valuable,” he said. “[Our third quarter] shows that when consumer confidence dips, trust in authentic brands rises.”
Meanwhile, last month, the company announced a 4 percent staff reduction that would cut 1,400 jobs. A variety of other cost-cutting measures are also under way. “We’re streamlining and realigning the entire organization on a global scale to target growth and effectively manage expenses at the same time,” President and CEO Mark Parker said during last week’s call. “We’re making some tough decisions, like a planned reduction in staff, and moving to consolidate our manufacturing base.”