AP
Nike 1Q profit falls on year-ago gain, sales grow
Wednesday September 24, 6:41 pm ET
By Sarah Skidmore, AP Business Writer
Nike's 1st-quarter profit falls 10 percent on year-ago gain, sales grow


PORTLAND, Ore. (AP) -- Nike Inc. said Wednesday that its profit fell in the fiscal first quarter from a year earlier, when it benefited from a one-time tax gain. Excluding that item, profit rose in the quarter on sales growth around the globe.

Investors, eager for good news in the market, sent Nike shares up in after-hours trading.

The Beaverton, Ore.-based athletic shoe and apparel company said its net income decreased to $510.5 million, or $1.03 per share, from $569.7 million, or $1.12 per share, a year earlier. But the 2007 quarter included a special item that increased earnings per share by 20 cents. If adjusted for the tax benefit, net income would have grown 10 percent.

Revenue jumped 17 percent to $5.43 billion. Changes in currency exchange rates increased revenue by 7 percentage points during the quarter.

Analysts surveyed by Thomson Reuters, on average, had expected the company to earn 92 cents per share on sales of $5.19 billion.

Nike's biggest growth continued to be in overseas markets, with revenue jumping 36 percent in the Asia-Pacific region. The company also had significant growth in developing markets such as Russia and Turkey. Revenue grew 8 percent to $1.8 billion for the quarter in the U.S., which is Nike's largest market but also one that has struggled with sluggish sales.

President and CEO Mark Parker said he was pleased with the quarter's results but said "we are not stopping to celebrate or be complacent."

The company's future orders, which investors were watching closely, were up. Orders scheduled for delivery from September through January totaled $6.8 billion, 10 percent higher than for the same quarter of last year.

Future orders were up over 50 percent in China, surprising some analysts and serving as payoff for Nike, which invested heavily in the Beijing Olympics -- a key event during the quarter.

"They really blew the lid off the cover there," said John Shanley with Susquehanna Financial Group.

Shares of Nike, which had fallen 2.6 percent to close at $59.27 in the regular session, rose 4.6 percent to $62.00 in after-hours trading.

Company leaders expressed concern about macroeconomic pressures and uncertainties moving forward, such as fluctuating oil prices. But they remained optimistic, saying the company would remain focused on keeping costs low, inventories tight and leveraging its existing assets as best able.

"We lead in product innovation in our industry," Parker said on a conference call. "Seeing that innovation become reality, a profitable reality, requires focus -- now more than ever."

The company also repurchased more than 7 million shares during the quarter for approximately $429.8 million as part of a previously announced buyback program.