Nike Inc. said Tuesday its fiscal fourth-quarter net income jumped 32 percent because of strong gains in overseas markets, subsidiary business and future orders for the world's largest athletic shoe and clothing company.
For the quarter ended May 31, net income reached $437.9 million, or 86 cents per share, up from $332.8 million, or 64 cents per share, for the same period of the prior year. Revenue for the quarter increased 9 percent to $4.4 billion, up from $4 billion a year ago. Currency-exchange rate changes helped boost sales by 2 percentage points for the year and the quarter, the company said.
The Beaverton-based company met Wall Street expectations for the quarter, based on a survey of analysts by Thomson Financial.
Nike shares were up $2.88, or 5.4 percent, to $56.70 in extended trading after the report was released. The stock gained 1 cent to $53.82 in the regular session Tuesday.
For the fiscal year, net income was $1.5 billion, or $2.93 per share, up from $1.4 billion, or $2.64 per share in the prior year. Sales were $16.3 billion for the year, up 9 percent from last year.
Chief Executive Officer Mark Parker said the results outpaced the industry.
"We have a lot of competitive advantages and behind them all is our relentless pursuit of performance and innovation in product," said Parker, who has now overseen his first full fiscal year as head of the company. "That's something you either have or you don't. You can't buy it, you can't fake it, all you can do is live it and strive to get better at it every day, which is what we do."
Analysts expressed surprise by Nike's announcement that future orders worldwide, which are scheduled to be delivered from June through November, grew 12 percent for the quarter.
Sara Hasan, an analyst with McAdams Wright Ragen in Seattle, called it a "blowout".
Overall, the company's overseas markets grew most quickly in Europe, where revenues increased 12 percent for the quarter, due in part to favorable currency exchanges. Nike executives said it saw stabilizing markets in France and the United Kingdom, where it has struggled for some time.
Nike saw revenue growth of 7 percent in Asia, largely because of growth in China, which the company says is poised to become its second-largest market in a few years. Revenues were flat in the Americas.
Nike allayed some fears with its domestic performance. The company reported U.S. revenues increased 10 percent to $1.6 billion for the quarter. The United States is Nike's largest market, but it has been in limbo because of economic challenges facing many of the nation's large retailers.
The company said it remains focused on diversifying its retail business in the future, such as its recent announcement to open House of Hoop specialty basketball stores with Foot Locker and its own independent sites in the future.
Nike also significantly improved its inventory levels, reducing their growth from the double digits of several past quarters to just 2 percent growth.
"It seems like the company has overcome a few obstacles," said John Shanley, an analyst with Susquehanna Financial Group.
And the company saw an outstanding performance by its other businesses, such as Cole Haan, Converse, Exeter Brands, Hurley International, Bauer Hockey and Nike Golf, which collectively grew by 16 percent to $2.3 billion for the year.
Some of the largest gains were made by Converse, which had its biggest global sales quarter with revenue increases of 23 percent.
"All their businesses performed really well," Hasan said.
The company executives said Nike is ideally positioned for growth and on target to meet its goal to reach $23 billion in sales by 2011. However, analysts remain wary of the future of retail outlets and possible benefit of currency exchanges weakening in the future.