“Nike Inc. (NKE), the world’s largest sporting-goods company, gained after easing investors’ concerns that its profitability and business in China were weakening.
Price increases enacted last year finally paid off for the Beaverton, Oregon-based company as its gross margin widened for the first time in nine quarters. Meanwhile, the company reported that orders for the Nike brand in China, excluding changes in currency exchange rates, gained after sales there sank 10 percent last quarter for a second straight decline.
The gain in gross margin came in the fiscal third quarter ended Feb. 28, when earnings from continuing operations rose 16 percent to $662 million, or 73 cents a share, from $569 million, or 61 cents, a year earlier, Nike said yesterday in a statement. Analysts projected 67 cents a share, the average of 20 estimates compiled by Bloomberg.
“Nike is firing on all cylinders right now,” said Brian Yarbrough, an analyst for Edward Jones & Co. in St. Louis, who has a hold rating on the shares. “They’ve been talking about, for several years now, expecting gross margins to eventually turn. And now it looks like that has played out.”
Nike rose 8.2 percent to $58.02 at 7:57 a.m. in New York. The shares had gained 3.9 percent this year through the end of yesterday’s regular trading, compared with an increase of 8.4 percent in the Standard & Poor’s 500 Index.
The company gave an initial forecast for fiscal 2014 that was in line with analysts’ estimates. Sales will increase in the mid-single-digit percentage range, and adjusted earnings per share will advance a mid-teen percentage. Analysts projected gains on average of 7 percent for revenue and 14 percent for earnings per share.
