Nike Inc. sprinted to the finish line as it ended the 2013 fiscal year with stronger-than-expected fourth-quarter earnings and signs of stabilization in its challenged Chinese business.

This story first appeared in the June 28, 2013 issue of WWD. Subscribe Today.

A 21.4 percent increase in Nike brand’s North American apparel business in the fourth quarter, to $748 million, lifted the brand’s apparel volume on the continent for the full year to more than $3 billion as its North American sales overall crossed the $10 billion milestone.

Nike’s closely watched future orders metric, reflecting business booked from June through November, rose 8 percent, with the figure for the Greater China market trending up 3 percent for the period, although flat when adjusted for currency fluctuations. Future orders in North America stood at 12 percent.


In the three months ended May 31, net income rose 21.7 percent to $668 million, or 73 cents a diluted share, from $549 million, or 59 cents. Excluding discontinued operations such as the divested Cole Haan and Umbro brands, adjusted EPS was 76 cents, 2 cents above the mark expected, on average, by analysts.

Revenues were up 7.4 percent, to $6.7 billion, from $6.24 billion a year ago, while gross margin was up 110 basis points to 43.9 percent of revenues. Analysts expected slightly lower revenues of about $6.64 billion.

In his final conference call as president of Nike brand before his July 1 retirement, Charlie Denson described North America as the company’s “MVP” for both the quarter and the year. Operating profit in North America during the quarter rose 28.6 percent to $723 million on a 12 percent increase in revenues to $2.71 billion.

Sales ticked up slightly in China during the quarter, up 0.3 percent to $669 million, blunting a sales decline for the year that came in at 3.4 percent, to $2.45 billion. Similarly, a 2 percent decline in quarterly operating profit in China, to $242 million, was better than the 11.2 percent decline for the year, to $809 million.

Donald Blair, chief financial officer, pointed out that revenue in China on a currency-neutral basis was down 1 percent in the quarter “as double-digit growth in performance running and basketball was offset by declines in other categories,” including sportswear.

“The most critical step in returning this market to health is creating a more compelling, productive and profitable retail marketplace,” he added. “As Charlie noted, we’re seeing some encouraging signs.”

For the full year, net income was up 11.8 percent to $2.49 billion, or $2.71 a diluted share, while revenues expanded 8.5 percent to $25.31 billion.

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