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Soccer fever helps Nike score strong sales in North America, Europe

By Devika Krishna Kumar

(Reuters) - Nike Inc reported better-than-expected quarterly results, as demand for its apparel and footwear rose in North America and Western Europe after the company spent heavily on marketing ahead of the 2014 soccer World Cup.

Shares of the world's largest sports wear maker rose 3.2 percent to $79.37 in extended trading.

Nike, known for its distinctive 'swoosh' or tick logo, gets more than half of its total revenue from North America and Western Europe.

Revenue from North America rose 10 percent in the fourth quarter ended May 31, while revenue from Western Europe jumped 18 percent, excluding the impact of currency fluctuations.

"Nike is the number one brand in each of the top 10 cities in Western Europe," Nike Brand President Trevor Edwards said on a post-earnings conference call.

The company has been giving tough competition to Germany's Adidas AG on the hotly-contested European turf.

Nike has been "putting a lot of trend-right products into the marketplace, so there's very high demand," Edward Jones analyst Brian Yarbrough said.

Nike maintained its share of the Western Europe sportswear market at about 12 percent in 2013, while Adidas's share shrank to 12.6 percent in the year from 13.2 percent in 2012, according to Euromonitor International data.

The soccer World Cup, hosted by Brazil, marks the first time that Nike is sponsoring more national teams than Adidas.

Nike signed up soccer legends Cristiano Ronaldo, Neymar Jr., Eden Hazard and Wayne Rooney for commercials to promote its merchandise ahead of the much-watched event. Its "Winner Stays" commercial attracted over 82 million views on YouTube.com.

The company said its marketing expenses rose 36 percent in the fourth quarter, mainly due to expenditure related to the World Cup.

Nike's marketing expenses are expected to increase by 30 percent in the current quarter as it looks to grab the attention of soccer fans, a company executive said.

Nike launched shoes branded Mercurial Superfly, Magista Obra, the Nike Hypervenom 2014 World Cup Boot and the Nike Tiempo Legend V World Cup Boot between March and May.

Ronaldo, declared the world's best footballer after he won the coveted Ballon d'Or, is wearing the Nike Mercurial Superfly in the World Cup.

"There are more players wearing Nike boots in the World Cup than all other brands combined," Nike's Edwards said.

STRONG OUTLOOK

Nike said it expected "tremendous energy" around the World Cup to help its first-quarter revenue grow in low double digits in percentage terms, including the impact of currency fluctuations.

Orders for Nike-branded shoes and clothing scheduled for delivery between June and November, a gauge of demand the company calls "futures orders," rose 12 percent globally in the fourth quarter, excluding the impact of currency fluctuations.

The rise in orders was driven by Western Europe, where futures orders jumped 25 percent.

Nike's net income from continuing operations rose to $698 million, or 78 cents per share, in the quarter from $690 million, or 76 cents per share, a year earlier.

Revenue from continuing operations rose 13 percent to $7.43 billion, excluding currency fluctuations.

Analysts on average had expected a profit of 75 cents per share and revenue of $7.34 billion, according to Thomson Reuters I/B/E/S.

(Editing by Kirti Pandey)

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