Nike Profit Driven by Higher Margins and Demand Across Europe

Nike Inc, the largest maker of sportswear in the world, reported a quarterly profit that was better than had been expected as it grabs market share across Europe and focus on products with higher margins such as its Flyknit soccer shoes.

Shares of Nike were up 6.5% during extended trading on Thursday.

Nike announced that orders for its branded clothing and shoes scheduled to be delivered from September to January was up 14% during the quarter, excluding any currency fluctuation impact.

Nike has given a great deal of competition to German sportswear maker Adidas AG, which this past July cut its annual revenue and profit projections.

When looking around the globe, there is not all that much competition, with both Adidas and Reebok struggling.
Nike has kept its share of the sportswear market in Western Europe, which in 2013 was 12%, while at the same time Adidas’ share contracted to 12.6% from 13.2% between 2012 and 2013.

The World Cup in Brazil this past June and July marked the first time Nike had sponsored more of the national teams than its rival Adidas.

At the same time, more players used Nike shoes that all of the other brands combined. Close to one third of the players wearing Nike shoes, wore Flyknit.

Soccer revenue globally increased at a percentage rate in the double digits during the first quarter, said Trevor Edwards the President of Nike Brand on a conference call Thursday.

The company announced it expected per share earnings to increase at a percentage in the high teens for second quarter and at a rate of 20% for the entire year.

Nike added that it expected its gross margin to expand by 125 basis points over the complete year.

The company announced that is gross margin increased from 44.9% in the same quarter last year to 46.6% in this latest quarter.

Nike said it saw an 18% increase in footwear, which is its largest as well as most profitable.

Revenue in North America was up 12% during the quarter, which ended on August 31, while Western Europe revenue spiked by 25%.

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