NKE 2009 Q4 Earnings

As the most recognizable athletic shoe and apparel maker in the world, Nike Inc. (NKE) confirmed after the market’s close on June 24 that the company’s profits in their 4Q receded as the global economy has taken its toll on Nike’s sales.

With consumers curtailing their spending habits, Nike was forced to adjust to extenuating circumstance, which included cost control measures, job cuts while limiting their supplier base and maintaining proper inventory control. Upon completion of these actions, Nike was able to come in ahead of Wall Street’s expectations.

For the recent quarter, Nike recorded net income of $341.4M, or $0.70 per share, compared to the previous year’s earnings of $490.5M, or $0.98 per share, a decline in profits of more than 30% year-over-year. Affecting the company’s results was a $195M pre-tax charge related to restructuring costs.

In order to combat the weakened retail environment, Nike was forced to cut 1,750 jobs during the quarter, which amounts to nearly 5% of the company’s overall workforce. Excluding the restructuring charges, Nike would have booked a quarterly profit of $0.99 per share or $485.9M, versus the prior year’s tally of $0.94 per share, or $472.8M.

Results based on charges being excluded would have shown Nike posting a profit above analysts’ projections of $0.96 per share.

Nike’s overall sales during the period declined as well, falling from $5.09B to $4.71B, a drop in revenues of more than 7% year-over-year. In the meantime, analysts within the industry were looking for the company to post quarterly revenues of $4.72B.

Browsing further into the company’s report, Nike revealed that sales within their U.S. division declined marginally, falling from $1.68B to $1.64B, a drop of just over 2%. Sales for footwear within the U.S. advanced 2% to $1.2B, while apparel sales declined a whopping 15% to $379.8M. Challenging market conditions, as well as a strategic company initiative to optimize the current product-line affected apparel sales.

Within the European, Middle East and Africa sales regions, revenues plunged nearly 19%, falling from $1.53B to $1.24B. Results were greatly affected by recent exchange rates, which would have shown a sales decline of only 3% if rates remained consistent.

Furthermore, footwear sales within the international markets dropped 13% year-over-year to $772.2M, while apparel revenues plummeted 28% over last year’s results to $383.9M.

On a global scale, pending orders for Nike brand apparel and footwear expected for delivery during June through November slipped 12% to total $7.8B, with future orders falling 4% in the U.S. Additionally, orders slated for the Europe, Middle East and Africa markets slid 24%, along with Central and South America dropping 7%.

For Nike’s fiscal 2009, the company posted annual earnings of $1.5B, or $3.03 per share, in contrast to 2008 profits of $1.9B, or $3.74 per share, a drop in income of more than 21%. Adjusted net income for the year came in at $1.9B, or $3.81 per share, versus 2008 earnings of $1.7B, or $3.45 per share, an increase in profits of nearly 12%.

Total sales for the year were recorded at $19.18B, up nearly 3% from the previous year’s tally of $18.63B. On average, analysts were projecting yearly earnings for Nike to come in at $3.77 per share with overall sales totaling $19.19B.

“Fiscal 2009 was a year that challenged companies to leverage core strengths and adapt quickly to a changing landscape. Our strong results demonstrate that we are meeting these challenges and seizing the opportunity to optimize our position as the industry leader,” affirmed CEO Mark Parker.

As the June 24 trading session concluded, shares of NKE finished the day down $0.52, or 0.9%, at $53.02. Upon the release of Nike’s earnings report, discouraged investors pushed the stock even lower in after-hours trading, as shares slipped $2.57 or nearly 5% per share.

Over the past year, shares of Nike have traded within a broad range, reaching as high as $68.00 per share and as low as $38.24 per share.

By BetterTrades