Nike third-quarter net income jumps 55 percent

Athletic wear maker to focus on Web sales

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BEAVERTON, Ore. — Nike Inc. said Thursday its third-quarter net income rose nearly 55 percent as the athletic gear maker's resurgence in North America and easing material costs helped offset continued sales weakness in China.

The world's largest athletic shoe and clothing company's results beat expectations, and its shares jumped 8 percent in aftermarket trading.

Like most global companies, Nike has been dealing with Europe's fluctuating economy and a slowdown in growth in China. Nike has been working to reduce its inventory and rework its offerings in China to adapt to the changing tastes of consumers. It also has been focusing on growth in North America, selling off less profitable brands such as Umbro to focus on core brands such as Nike.

The company's quarterly results show Nike's strategy is paying off in North America, but it's still facing weakness in China. North American revenue, which accounts for 40 percent, rose 18 percent to $2.55 billion. Revenue in China, which accounts for 10 percent, was down 9 percent to $635 million.

"The U.S. business continues to be just phenomenal," said Morningstar analyst Paul Swinand. But he added that "for real long-term growth to be solid, it has got to come from China and emerging markets."

Nike CEO Mark Parker said the company was progressing in China, but "we still have more to do before we can capture its long-term growth potential."

Net income for the three months ended Feb. 28 rose to $866 million, or 73 cents per share. That compares with $560 million, or 61 cents per share, in the same quarter of 2012. Analysts expected 67 cents per share, according to FactSet.

Higher labor costs were more than offset by raising prices and easing material costs, the company said.

Revenue rose 9 percent to $6.19 billion, from $5.66 billion in the same quarter of 2012, nearly matching analysts' expectations of revenue of $6.2 billion.

Brand revenue rose 10 percent excluding currency fluctuations, growing everywhere but China and Japan. Growth from other brands including Converse, Nike Gold and Hurley rose 9 percent.

Orders for Nike shoes and apparel to be delivered between May and July rose 6 percent to $9.9 billion. That includes an 11 percent increase in North America, a 5 percent decline in Western Europe and a 4 percent increase in China.

Parker said e-commerce is a focus for the future. Online revenue rose 33 percent in the quarter, but Parker said he would like to grow that business more.

Shares rose $4.30, or 8 percent, to $57.90 in aftermarket trading, after ending the day down $1.23, or 2.2 percent, at $53.60.