Despite the challengers, Nike (NYSE: NKE) still remains king of the athletic apparel market. Following the better-than-expected bottom-line results for third quarter fiscal 2013, the shares of global sport equipment and apparel retailer, Nike Inc. soared to a new 52-week high of $60.25 on Friday, Mar 22. The company closed trading at $59.53 on Mar 22, representing a solid return of 11.1% from the closing price of $53.90 on Mar 21, and gained about 15.3% year-to-date. Average volume of shares traded over the last 3 months stands at approximately 3,862,840.
On Mar 21, Nike came up with its third-quarter fiscal 2013 earnings of 73 cents per share, which surpassed the Consensus Estimate of 67 cents. Moreover, the quarterly earnings climbed 19.7% year over year, resulting from increased revenues, improved margins, lower share count and reduced tax rate. Nike’s total revenue grew 9% year over year to $6,187 million primarily driven by robust performances across all geographical regions barring Greater China and Japan. Moreover, the company registered growth in all key categories excluding Sportswear and Action Sports.
An impressive record of beating the quarterly earnings expectations, sustained focus on brand building as well as initiatives to expand operation in the emerging markets are the major attributes that pushed the shares of Nike to a new high.
Nike brand sales in Western Europe and Central and Eastern Europe increased by 8% and 16% y-o-y, respectively, during the quarter. The company is seeing mixed trends in different markets of Europe. While demand is growing in Germany, the UK, and the developing countries of Central and Eastern Europe (especially Russia and Turkey), Southern Europe continues to be a challenging market due to macro headwinds in the region. We think European revenues will continue to post growth in the future owing to increasing demand from the region. However, if the euro weakens, it could present headwinds to Nike’s revenues. Futures orders from Western Europe fell by 5% due to difficult y-o-y comparisons as sales in the prior year were fueled by Euro Champs and Olympics. In contrast, futures orders from Central and Eastern Europe rose by 11%.
Emerging markets’ revenues grew by 6% annually (in dollar terms) and by 8% (in constant currency terms) in Q3 2013. While higher demand was recorded across different markets in this category, the growth was comparatively weaker in Korea and Argentina reflecting the macro economic conditions in these countries. Future orders from emerging markets were up by 16% (in constant currency terms) indicating high demand from the region.
The apparel juggernaut is in a more competitive space recently, but continues to dominate and grow, making it a darling to investors.
