Nike Plans to Raise Prices

The athletic apparel maker, which posted a 5.2% increase in its fiscal third-quarter earnings, said because of rising oil, cotton, labor and air-freight costs, its gross margins will continue to lag in the near team. (casio CNP-110 battery )Nike executives, on a Thursday conference call, said the price increases won't begin to mitigate that margin pressure until next fiscal year.
Nike, which reported after the close, had been engaging in "surgical" price increases that targeted specific products and markets, but coming price increases will be "across the board," the company said.
Nike shares fell 6.5% to $80.50 apiece in after-hours trading, after rising 59 cents to $85.41 in 4 p.m. composite trading on the New York Stock Exchange. (casio NP-20 battery )
Nike, one of the world's largest sporting goods makers, said gross margin in the latest quarter fell to 45.8% from 46.9% on higher costs combined with less license revenue.
On the conference call, Chief Executive Mark Parker said the U.S. consumer remains under pressure from high unemployment and inflation risks.
Positive currency changes helped propel Nike sales in China, Japan and emerging markets up nearly 15% to $1.39 billion, even with revenue in Japan falling 8% versus last year. (casio NP-30 battery )Japan sales in the latest quarter were down 16%, excluding currency changes.
Nike said all of its employees in Japan were accounted for and safe, following last week's earthquake and tsunami.
Japan had been a "challenging" market even before the tragedy, Nike said, and it expects the disaster will have a negative impact on both its revenue and profit in the country.(casio NP-40 battery ) Executives said, however, said it is still too early to determine the extent of that effect.
Currency changes caused European Nike sales for the quarter to slip $10 million to about $1.16 billion, most notably turning 6% revenue growth in Western Europe absent currency adjustment to a 2% sales decline.
World-wide future orders, an indicator of growth based on estimates of product orders, increased 11% to $7.9 billion. Excluding currency changes, those orders grew 9%.(casio NP-60 battery )
For the latest quarter ended Feb. 28, Nike posted a profit of $523 million, or $1.08 a share, up from $497 million, or $1.01 a share, a year earlier.(fujifilm NP-100 battery ) Revenue rose 7.3% to $5.08 billion. Analysts surveyed by Thomson Reuters predicted earnings of $1.12 a share on revenue of $5.18 billion.
In North America, Nike's largest market, sales were up 9% to $1.84 billion. On the call, Nike said North America and China are crucial to the footwear giant's future success.(fujifilm NP-120 battery )
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