AP
Nike Posts 10-Pct Rise in 2Q Profit
Wednesday December 19, 7:08 pm ET
By Sarah Skidmore, Associate Press Writer
Nike Posts 10-Percent Increase in 2Q Profit, Driven by International Sales


PORTLAND, Ore. (AP) -- Nike Inc.'s second-quarter profit grew 10 percent, largely fueled by international sales growth, the athletic shoe and clothing company said Wednesday.

Nike reported second-quarter net income of $359.4 million, or 71 cents per share, up from $325.6 million, or 64 cents, in the same period a year earlier.

The results exceeded analyst expectations.

Shares of the Beaverton-based company rose $1.71, or nearly 3 percent, to $63.80 in after-hours trade Wednesday.

Quarterly revenue grew 14 percent to $4.3 billion for the quarter ending Nov. 30. Changes in currency accounted for 4 percentage points of that growth.

The company benefitted from a weaker dollar, which makes exports less expensive and more competitive abroad.

The company registered its largest revenue growth overseas. Revenue grew 19 percent in the Americas region, with Europe following closely at 18 percent, while and the Asia-Pacific regions jumped 17 percent.

Analysts said the growth in international business was much stronger in Asia and Europe than expected.

"With the continued growth in China and some of the markets they hadn't talked about in the past, like Turkey and Russia, those are all positive indications," said John Shanley with Susquehanna Financial Group.

By comparison, revenue growth in the U.S. reached 7 percent.

Company officials said they were pleased with the performance in the domestic market, which had been struggling for some time with mall-based retailers. Company officials say sales were up in Nike-owned stores and nine of its top ten retail accounts.

The company also reported that worldwide future orders, which are scheduled to be delivered from December through April, totaled $6.5 billion -- up 13 percent from the same period last year. Changes in currency exchange rates increased orders growth by 3 percent.

Nike President and Chief Executive Officer Mark Parker called the second quarter "another great one."

"It illustrates the ability of our portfolio to deliver consistent, profitable growth," he said.

The company also saw cash and short-term investments improve -- at a reported $3.1 billion at the end of the quarter, compared with $1.9 billion last year.

Nike subsidiaries such as Converse, Nike Golf and Cole Haan, grew 16 percent to $613.7 million.

Nike leaders say they project low double-digit revenue growth for the second half of 2008.

Nike has made several changes to its subsidiary lineup recently such as selling the Starter brand and putting Nike Bauer Hockey up for sale. The company also recently announced plans to buy European soccer company Umbro PLC.

"We are making some bolder, more aggressive moves with the portfolio than in recent years," Parker said.

But company executives say they do not see any other subsidiary moves in the immediate future.