Nike officials reiterated intentions to raise prices in the face of higher input costs, as the company reported its fiscal 2011 third-quarter results March 17.
The Beaverton, Ore.-based athletic footwear and apparel company said its latest quarterly revenue, ended Feb. 28, came in at $5.1 billion – up seven percent from the same period a year ago. Nike’s quarterly net income rose 5 percent to $523 million, or $1.08 per diluted share, compared to $497 million, or $1.01 per diluted share a year ago.
Although up, the figures were below Wall Street expectations due to higher product and freight costs.
Gross margins fell by 1.1 percent as the company “began to see the impact of rising input costs, such as oil, cotton and labor,” CFO Donald Blair said March 17 during Nike’s conference call, according to transcripts.
“We expect these headwinds will continue through most of fiscal year 2012,” Blair said. “We have a number of tools to mitigate the impact of these headwinds. The most significant are leveraging our supply chain and raising prices.”
Blair said the company would carefully consider each pricing action “to maintain a competitive consumer value proposition,” but the increases likely will be pervasive.
“In the past, we've taken a fairly surgical approach to pricing," he said. "Beginning in spring 2012, we'll take more significant price increases across a broader range of styles.”
Nike officials said they remained optimistic with future product orders on the rise – up 11 percent to $7.9 billion for the March through July 2011 period. By region, future orders were the strongest in the emerging markets (up 21 percent), followed by China (up 19 percent) and North America (up 11 percent).
During its fiscal third quarter, Nike saw its strongest revenue growth from its Converse, Cole Haan and Hurley brands, while weaker revenue was reported in its Umbro and Nike Golf brands.
-- Compiled by David Clucas