LOS ANGELES - Nike Inc, the world's largest athletic shoe company, today said its quarterly profit rose 15 per cent on strong US demand for its high-end athletic footwear, despite slowed growth in Europe and Japan.
But the company's shares fell from a New York Stock Exchange close of US$88.48 ($131.47)
to US$85.59 in after hours trading on Inet after what one analyst said was a weaker-than-expected growth of 2.5 per cent for future global orders.
Despite "better than expected earnings, the future growth looks a little less robust than analysts had been expecting," said McAdams Wright Ragen analyst Jamelah Leddy.
The shoe and apparel giant, which faces increased competition in light of a pending merger between Adidas-Salomon and Reebok International Ltd, posted a fiscal 2006 second-quarter net profit of US$301.1 million, or US$1.14 per share, compared with US$261.9 million, or 97 cents per share, a year earlier. Sales jumped 10 per cent to US$3.5 billion from US$3.1 billion in the year-ago period, Nike said.
Wall Street analysts, on average, had been expecting earnings per share of US$1.04, excluding items, on revenue of US$3.4 billion, according to Reuters Estimates.
Worldwide orders for athletic footwear and apparel for delivery from December 2005 through April 2006 - a key indicator - increased 2.5 per cent from a year earlier to US$5.2 billion. Future orders in the United States grew 9 per cent.
"The power of our Nike Inc. portfolio was evident this quarter, with strength in the US, China and Latin America balancing more challenging results in Western Europe and Japan," said chief executive William Perez in a statement.
The Beaverton, Oregon-based company has benefited recently from large retailers such as Foot Locker Inc reallocating shelf space away from Reebok's offerings in favor of more trendy and expensive shoes, such as Nike's Air Force 1 or Puma AG's European-style footwear. Nike has also expanded beyond traditional athletic shoe stores into general merchandise chains and sporting goods stores, boosting US sales.
Nike, trading at more than 15 times estimated 2007 earnings, is valued at a slight premium to the Standard & Poor's 500 Index, but below Reebok, which trades just over 17 times forward-looking earnings.
- REUTERS