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Strong Sales, Weak Dollar Boost Nike Profit

By Reuters
Published | Updated

SAN FRANCISCO – Nike Inc. (NKE) Thursday posted a higher quarterly profit that topped Wall Street estimates, citing strong sales of high-priced athletic and basketball shoes in the United States and growth in emerging markets.

Net income for the fiscal third quarter ended Feb. 28 rose to $273.4 million, or $1.01 a share, from $200.3 million, or 74 cents a share, in the year-ago period.

Analysts, on average, were looking for the company to post a profit of 99 cents a share, within a range of 95 cents to $1.05, according to Reuters Estimates.

Jamelah Leddy, an analyst at McAdams Wright Ragen, said the results showed the company's plan to look beyond its core Nike U.S. shoe and apparel business to fuel growth was paying off.

"It was a good, solid quarter," she said.

Revenue increased 14 percent to $3.3 billion as global consumer demand for Nike brand footwear and apparel remained strong. The company also said the impact of a weak dollar helped boost results.

The company said revenue rose 9 percent to $1.3 billion in the United States, where demand was "particularly robust" due to the success of products like the Shox (search) running shoe and its Air Jordan (search ) line of basketball shoes.

Emerging markets such as China, Russia and Brazil also fueled growth during the quarter, as did the company's other brands such as Cole Haan and Converse, Nike said. Revenue for the company's brands besides Nike jumped 20 percent to $389.6 million.

Worldwide orders for athletic footwear and apparel for delivery from March 2005 through July 2005, a key indicator, increased nearly 10 percent from a year earlier to $5.2 billion. Future orders in the United States grew 9 percent.

The results follow Nike co-founder Philip Knight's (search ) decision late last year to step down as chief executive and turn the reins of the company over to William Perez, who ran privately held consumer products company S.C. Johnson & Son Inc.

Analysts said the decision to name an executive with experience managing different brands made sense because the mature U.S. athletic shoe market has forced Nike to look beyond its core U.S. business to boost sales.