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THE SPARK: Strong demand in North America and emerging markets helped results, though that was offset somewhat by weaker sales in China and costs from selling two brands. But revenue rose 17 percent in North America, by far Nike's largest market, helped by demand for basketball shoes and NFL gear. Emerging markets were also a strong point, with revenue up 11 percent. The company's per-share earnings of $1.14 easily beat out predictions of $1 per share from the analyst that follow Nike. THE BIG PICTURE: Like most global companies, Nike has been dealing with Europe's weak economy and a slowdown in growth in China. The company is trying to reduce inventory in China and reworking its product lineup there to adapt to the changing tastes of Chinese consumers. THE ANALYSIS: Analysts were more cautious than investors. Janney Capital Markets analyst Eric Tracy downgraded Nike to "Neutral," saying the quarter was decent, but there is less chance of an upside to results now. Even though he praised Nike's new product pipeline and better gross margin trends, he said Nike is in a "bit of a transition period," with revenue trends now facing tough comparisons with a year ago. Sterne Agee analyst Sam Poser kept his rating "Neutral," and said despite strong growth in North America, a turnaround in China will take several quarters so it's best to stay on the sidelines for now. SHARE ACTION: Nike Inc. rose $5.08 to $104.08 in midday trading. The stock had been up about 2.7 percent this year as of Thursday's close. |
