Tags: NKE | Nike | retail | apparel | footwear | stock

Nike Boosts Revenues, Battles Costs

By Forrest Jones   |   Thursday, 09 Jun 2011 04:17 PM

Nike (NKE) is still “just doing it.” It's earning money in a tough environment. Revenue at the athletic shoe maker during the third quarter of fiscal 2011 hit $5.1 billion, up 7 percent versus the same period in the prior year. Nike reported net income during the quarter up 5 percent to $523 million.

Higher production costs ate into profits, as evidenced by the company's gross margin, which measures profitability. In short, making shoes in one corner of the world and shipping them elsewhere cost more money, even if demand was strong.

Gross margin fell 110 basis points to 45.8 percent thanks to higher product costs, elevated freight costs, including additional air freight, and falling license revenues, the company says in an earnings statement.

"These factors more than offset the positive impacts of favorable year-over-year changes in foreign exchange rates, a higher mix of full-price sales, the benefits of ongoing product cost reduction initiatives, and growing sales from our Direct to Consumer operations," the company added.

Don't worry about the fate of one of the world's most iconic brands. Moody's Investors Service has assigned the company an A1 rating with a stable outlook.

"The stable outlook reflects our expectation that Nike will maintain its leading market position and overall stable operating performance while also maintaining conservative financial policies," Moody's says in a review of the company.

China is the future

To grow, Nike will focus heavily on markets outside of the United States, China especially, says the ratings agency.

The company maintains the leading market share in United States, according to Moody’s, but the domestic athletic footwear market has reached saturation. Future growth will depend largely on international expansion, it said.

“We believe that Nike will preserve its domestic market share while continuing to capitalize on promising growth opportunities, notably in emerging markets," Moody's says.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
Companies
Nike (NKE) is still just doing it. It's earning money in a tough environment. Revenue at the athletic shoe maker during the third quarter of fiscal 2011 hit $5.1 billion, up 7 percent versus the same period in the prior year. Nike reported net income during the quarter up...
NKE,Nike,retail,apparel,footwear,stock
305
2011-17-09
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved