The world's largest athletic shoe maker Nike Inc. (NYSE: NKE) reported on Thursday overall sales were not able to keep pace with increasing costs, yet growth in China and emerging markets drove the company's fiscal third quarter past analysts' expectations.
The Beaverton, Ore.-based company reported a net income of $560 million, or $1.20 a share, for the quarter ended Feb. 29, up 7 percent from $523 million or $1.08 a share, during the same period last year.
Analysts expected $1.17 per share, according to Bloomberg.
The number of shares outstanding fell, as the company is in the midst of a four-year share repurchasing program.
Revenue was $5.85 billion, up 15 percent from $5.08 billion in the year-earlier period.
The revenue increase was largely driven by growth in Greater China, where sales of footwear grew 35 percent, to $449 million from $333 million, with total sales in the area growing 25 percent. Total sales in emerging markets grew 23 percent as well.
Gear for road warriors and treadmill devotees remained Nike's strongest seller.
Nike has a very strong product cycle within the running category, which is pretty much the largest category in footwear, Matt Arnold, consumer discretionary analyst for Edward Jones, told Reuters.
The company expects continued growth, with future orders for the brand growing 15 percent overall, with Greater China and North America up 24 percent and 22 percent, respectively.
Nike CEO Mark Parker remains optimistic about the company's ability to navigate the still-murky global economic waters. New products such as the constantly sold-out Nike+ Fuelband, a device which monitors a person's daily activity and syncs the data with Nike's servers, have shown promise. The introduction of FlyKnit lightweight shoes, as well as other gear to be flaunted by Olympians in London this summer, also has the company feeling bullish.
The environment remains volatile, but I'm optimistic about the future, Parker said in a statement. We're starting a great season of major sports events and we have a pipeline full of innovation to fuel growth over the long term.
Nike's shares were down $3.78 to $107.21 in late afternoon trading.