Nike Inc. handily beat third-quarter earnings estimates, excluding a $240.7 million impairment charge associated with its Umbro acquisition, but is preparing for shrinking global demand.
With futures orders down 10 percent to $6.5 billion for the fourth quarter, the active giant warned of further layoffs and restructuring charges of $175 million to $225 million in its fiscal fourth quarter.
For the three months ended Feb. 28, the Beaverton, Ore.-based firm’s earnings fell 47.4 percent to $243.8 million, or 50 cents a diluted share, compared with $463.8 million, or 94 cents, in the third quarter of fiscal 2008.
Sales for the quarter dipped 2.3 percent to $4.44 billion from $4.54 billion. Excluding currency exchange rate changes, revenue would have increased 2 percent, with footwear strength balancing weakness in apparel.
Excluding the noncash charge related to the impairment of goodwill of Umbro, earnings would have been up 4 percent to $484.5 million, or 99 cents a share. Analysts’ estimates were 79 cents a share.
“We don’t have to wait until after the economy recovers,” said Nike president and chief executive officer Mark Parker on an after-hours earnings call Wednesday. “We’re able to build a better company, drive cost savings into the business and reinvest in opportunities…to put us in a position to accelerate our strategic vision rather than reinvent it.”
Regional performance for the quarter was varied for the company. In the U.S., Nike sales increased 3 percent to $1.61 billion, with a rise in footwear sales offsetting declines in apparel and equipment. In the Asia-Pacific region, sales climbed 8 percent to $806.9 million, with increases across all categories. But sales in Europe and the Middle East fell 14.5 percent to $1.19 billion, and sales in the Americas region declined 5 percent to $245.4 million.
Sales for the company’s “other businesses,” including Cole Haan, Converse and Umbro, inched up 0.8 percent to $592.2 million. Converse led the way with 30-plus percent growth, while Cole Haan is feeling the economy’s impact, said Parker, who said Umbro will require more work — part of why Nike took an impairment charge related to the brand.
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Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews