Nike Inc. posted a 23% jump in quarterly profits and particularly strong sales gains in China, as the world’s largest sportswear maker bucked concerns about that country’s economic health.
The athletic gear company reported a three-month profit of $1.18 billion as sales rose 5% from a year earlier to $8.41 billion. Excluding the effects of currency fluctuations, Nike said its global sales rose 14% in the quarter ended Aug. 31. Leading all regions in revenue growth was China, where sales jumped 30% to $886 million.
China had been a trouble spot for Nike just two years ago, as the company wrestled with lagging sales and depleted demand after a massive run-up to the 2008 Olympics. The company has worked with wholesale partners in the region to remodel how products are displayed to customers.
“While we are very mindful of the macroeconomic volatility in China, our brand has never been stronger and our marketplace has never been more healthy,” said Andrew Campion in his first earnings call as Nike’s chief financial officer. Mr. Campion succeeded Don Blair, who retired this summer.
Nike said futures orders, which reflect products scheduled for delivery in the next six months, rose 9% on global basis. Futures orders are closely watched by investors as a benchmark for demand for Nike products.
Shares of the Beaverton, Ore.-based company rose 7.8% to $123.90 in recent after-hours trading as the company’s per-share earnings and revenue surpassed expectations. Through Thursday’s close, the stock had risen 42% over the past 12 months.
Nike has been benefiting from cultural trends that favor its products, including the rise of athletically styled footwear and clothes among consumers who aren’t necessarily planning a workout.
The world’s top sneaker seller also holds the lead in the sports apparel sector, where in addition to competition from Germany-based rival Adidas AG, younger rivals such as Under Armour Inc. and Skechers USA Inc. have been moving in on its turf.
Nike reported a 10% rise in inventories in North America, which it attributed in part to buildup from the West Coast port closures earlier this year. Executives said that they expect the clearance of excess inventory to resolve in the next two quarters, which could impact margin growth during the period.
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