PORTLAND, Oregon (AP) — Nike Inc.'s fourth-quarter profit rose 14 percent to beat expectations as strong sales of sneakers and sportswear around the world offset higher costs.
Nike warned investors recently that higher manufacturing costs would cut into its profit margins through the rest of the year and into 2012. The company raised its prices in the past year to offset the cost pressures, but the popularity of the swoosh remained strong and shoppers continued to buy more Nike products even at higher prices.
"We delivered exceptional results in extraordinary times," Mark Parker, Nike's CEO said Monday.
Nike reported that it earned $594 million, or $1.24 per share, for the quarter that ended May 31. That's up from the $522 million, or $1.06 per share, it earned in the same quarter last year. Revenue rose 14 percent to $5.77 billion.
The results handily beat the $1.16 per share on revenue of $5.53 billion that analysts polled by FactSet were anticipating.
Nike's shares jumped $3.65, more than 4 percent, to $85.27 in after-hours trading.
Nike's revenue improved in every market around the globe except Japan, which is struggling in the tough economic times and the aftermath of the earthquake and tsunaumi.
Revenue in North America, its largest market, increased 22 percent to $2.1 billion as it sold more of its running, training and basketball products. The company said that improved product lines and earlier shipments of summer products helped drive sales. Revenue in China, its second largest market, rose 21 percent.
Nike also continued its growth in emerging markets such as Brazil and Mexico where revenue rose 25 percent. Business was much softer in Western Europe, where revenue rose 5 percent, and other parts of Europe, where it rose 1 percent due largely to the benefit of exchange rates.
For the full year, Nike earned $2.13 billion, or $4.39 per share, compared with $1.9 billion, or $3.86 per share, for the prior year.
Nike, unlike many other consumer products companies, has weathered the tough economic times well.
While the company's revenue and profit slowed during the down the global economy, consumers have continued to flock to its popular brand name around the world. Nike's emphasis on innovative products and connection with consumers, along with global reach and tight operations, have given it the edge it needed to thrive, analysts say.
"Consumer confidence is still a little tepid," said Morningstar analyst Paul Swinand. But "sporting goods are less volatile."
Nike officials are relying on strength in the brand to propel it forward. The company plans to expand its price increases to a broader array of products beginning this spring to balance out higher costs for freight, labor, materials.
"The global appetite for sports has never been stronger," Parker said
Nike said orders for products to be delivered between June and November are up 15 percent compared with the same period last year. Investors typically look at this as a measure of what retailers think consumers may have an appetite to buy in the coming season.
Nike is hosting an investor conference Tuesday where will review the results further and discuss its long-term strategy.