Nike quarterly net income up 14 percent

By Alistair Barr

NEW YORK (Reuters) - Nike Inc reported better-than-expected fourth-quarter earnings on Monday as a 14 percent increase in revenue helped offset higher costs and orders showed surprising strength for the future.

Nike shares gained 4.3 percent to $84.14 in after-hours trading.

The sports gear maker's net income in the fiscal fourth quarter which ended May 31, rose 14 percent to $594 million, or $1.24 a share. Net income for the year ago period was $522 million, or $1.06 a share.

Nike was expected to earn $1.16 a share, according to the average estimate of analysts surveyed by Thomson Reuters.

Apparel retailers are struggling with higher material, labor and freight costs. But Nike was able to fend off such pressure because demand for its brand was so strong during the quarter, according to Matt Arnold, an analyst at Edward Jones.

Revenue for the quarter rose to $5.8 billion from $5.08 billion. Revenue climbed 11 percent excluding currency movements.

Nike was expected to generate $5.528 billion in revenue in the period, according to a Thomson Reuters analyst poll.

"The best way to offset higher costs is to generate strong demand growth and Nike was able to do that," Arnold said.

Barclays Capital analyst Robert Drbul expected futures orders to be up 8 percent to 10 percent in constant dollars. Arnold, the analyst at Edward Jones, was expecting future orders to be up at least 8 percent.

Strong futures orders suggest Nike will be able to raise prices later this year, Arnold added.

Fourth-quarter revenue generated from Nike brands jumped 22 percent to $2.1 billion in North America, the company reported. The strongest growth came from running shoes, men's training gear, sportswear, basketball and women's training, which were all up at least 10% in the period.

Footwear sales were up 20%, while apparel revenue rose 28%, "driven by strong category presentations, improved product lines and earlier shipments of summer season product," Nike said in a statement.

Sales were partly driven by Nike Free, a new line of shoe that mimics barefoot running, Arnold said.

Nike also highlighted its Direct to Consumer business, which includes online sales. Sales were up 23% in this segment, with online sales rising 31%, the company reported.

(Reporting by Alistair Barr and Phil Wahba. Editing by Robert MacMillan, Carol Bishopric and Sofina Mirza-Reid)