Nike Earnings Review

Nike (NKE: 73.64 +0.15%) reported their fiscal third quarter 2009 results after the close yesterday that were above Wall Street’s expectations. The company reported EPS of $.99 which exceeded analyst expectations of $.79. Revenue came in at $4.44 billion which was slightly below consensus estimates of $4.48 billion.

Key Highlights

The company was able to deliver solid results despite the difficult economic environment and declines in their EMEA operations. Highlights include:

Revenues declined 2% y/y to $4.4 billion
U.S. revenues increased 3% to $1.6 billion
EMEA revenues declined 14% to $1.2 billion
Asia-Pacific revenues grew 8% to $807 million
Future orders for March-July are 10% lower than last year
The majority of the decline in future orders comes from EMEA (Europe, the Middle East and Africa) which has declined 25% vs. only a 1% decline on U.S. orders
Exited the quarter with $2.6 billion in cash & equivalents (down from $2.9 billion last year)

“Today’s results say a lot about the strength and diversity of Nike, Inc. In a challenging environment, we delivered excellent operating results by executing with both focus and flexibility,” said Mark Parker, President and CEO of Nike, Inc. “I feel very good about our performance and our potential. Going forward we’ll continue to stay close to the consumer, drive innovation into the marketplace, and operate with financial discipline by making the right decisions to restructure our organization for the future. The Nike, Inc. portfolio of brands is a diverse and competitive asset. We’ll continue to leverage all aspects of it to deliver consistent, long-term shareholder value.”

Earnings Analysis

Third quarter performance was very strong given the current economic climate and the company actually grew revenues by 2% when you exclude the currency impact. While declines in future orders shows that the company is not immune to the slowdown in consumer spending, the outlook for Nike still remains strong.

Share Performance

Nike’s shares are down 2.2% in early-morning trading to $44.91. However, the stock has held up reasonably well in 2009, falling only 10% since the beginning of the year despite the 15% drop in the Dow Jones index.

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