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Written by: Staff
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Los Angeles, Mar 22: Nike Inc. on Tuesday posted a 19 percent rise in quarterly profit, topping Wall Street estimates as robust U.S. sales of footwear and apparel offset stagnant demand in Europe and Japan.

Nike also reported margins narrowed in the quarter, and unfavorable currency exchange rates hampered growth in orders for merchandise scheduled for delivery from March through July.

Nike shares dipped about 1 percent in extended trade.

The No. 1 shoe and apparel maker said net income in its third quarter rose to $325.8 million, or $1.24 per share, from $273.4 million, or $1.01 per share, in the year-ago period.

Revenue rose 9 percent to $3.61 billion.

Wall Street had expected a profit of $1.10 per share, on average, on revenue of $3.53 billion, according to Reuters Estimates.

In the United States, sales increased 14 percent, driven by an 18 percent increase in footwear, with Europe posting a 5 percent decline in sales. In Asia, sales rose 13 percent, while the Americas region posted a 41 percent rise in sales.

Nike said revenue from its other brands, such as Nike Golf, Cole Haan, Hurley and Converse, rose 17 percent to $454.5 million.

''The strength of our product pipeline, brand portfolio and global reach is enabling us to balance continued challenges in markets such as Western Europe and Japan with strong momentum in other key markets and regions,'' said Chief Executive Mark Parker in a statement.

Global orders for apparel and shoes for delivery between March and July increased 2.9 percent over the year-ago period, but were dampened by changes in currency exchange rates.

Excluding that impact, futures orders increased 5.4 percent.

Gross margin -- the percentage of revenue remaining after subtracting product costs -- narrowed during the quarter to 43.6 percent from 44.1 percent, Nike said.

Last quarter, a 2.5 percent increase in worldwide orders for athletic footwear and apparel disappointed Wall Street analysts.

Analysts have been watching to see how much of a boost Nike will gain from the upcoming World Cup soccer championship in Europe, where poor economic conditions have resulted in sluggish sales of the company's premium products. Nike has said it intends to aggressively market its soccer apparel and shoes, but exactly how much it plans to spend is unknown.

Also unclear is how Nike will fare as it counteracts a new push by Adidas-Salomon AG, which recently acquired Reebok, to infiltrate the U.S. market dominated by Nike. Analysts have speculated that spending will increase and gross margins will narrow.

The results are Nike's first since Parker took the helm from former head William Perez, ousted in January following disagreements with company founder and Chairman Philip Knight.

Many saw the new role for Parker, who had served as co-president of the Nike brand, as a sign the company would focus on its core business, rather than its subsidiaries, for long-term growth.

Nike's valuation is at a five-year low, at nearly 15 times 2006 earnings, and shares trade at a discount to those of Adidas-Salomon and Puma AG, which trade at approximately 16 times and 20 times earnings, respectively.

Shares of Nike fell to $84.30 in extended trade. In regular trade, the stock closed down 56 cents at $84.95.

Reuters

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