Nike Inc's quarterly profit beat Wall Street's expectations, as margins increased and future demand for its apparel and shoes rose, sending its shares up 8 percent.
Orders for Nike-branded shoes and clothing scheduled for delivery from March through July 2013, known as futures orders, rose 6 percent compared to orders reported for the same period last year. In North America, the company's biggest market, orders were up 11 percent.
Continue Reading Below
The company also saw a turnaround in future demand in Greater China, with orders rising 4 percent, after falling in the previous two quarters.
"They turned China much faster than we thought," said Brian Yarbrough, consumer discretionary analyst for Edward Jones.
Shares of the Beaverton, Oregon-based company rose to $57.93 Thursday in extended trade. They closed at $53.60 on the New York Stock Exchange.
Analyst Paul Swinand with Morningstar said one of the biggest challenges for the company is to grow in its more mature markets and the strong demand in North America shows it is able to do that.
Nike also posted its first growth in gross margins in around two years, with margins rising 30 basis points in the quarter. High costs of raw material and labor pressured the company's margins over the past couple of years and Nike had been fighting it by raising price tags on merchandise.
"Gross margin benefited from the combination of pricing actions and easing material costs, which more than offset higher labor costs," the company said.
For the third quarter ended February 28, the company earned $662 million, or 73 cents a share, compared with $569 million, or 61 cents a share last year. Analysts, on average, expected earnings of 67 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 9 percent to $6.2 billion.
(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Bernard Orr)