updated 12/20/2005 8:12:57 PM ET 2005-12-21T01:12:57

Nike Inc. said strong U.S. sales boosted second-quarter profits 15 percent to $301 million, but shares of the world's largest athletic shoe and clothing company slumped in late trading as future orders fell short of expectations.

Nike reported Tuesday that it earned $1.14 per share for the quarter, 11 cents better than the $1.03 per share predicted by analysts surveyed by Thomson Financial. The company posted a profit of $261.9 million, or 97 cents a share, in the same fiscal period last year.

Sales rose 10 percent, to $3.5 billion, from $3.1 billion for the second quarter of 2004.

But Nike said currency exchange rates "significantly reduced growth" in future orders, which increased 2.5 percent to $5.2 billion compared to the same period last year.

Mitch Kummetz, a senior analyst for D.A. Davidson & Co., said he was disappointed by the lackluster growth in orders.

"The futures orders were up only a couple of percent. That's pretty disappointing compared to where the numbers came in last time," he said, noting that future orders jumped more than 9 percent at the end of the same quarter last year.

Nike CEO William Perez, who wrapped up his first year at the helm of the athletic shoe and clothing manufacturer, said the company saw strong growth in the United States, Latin America and China. But that was balanced by a weak performance in Western Europe and Japan, two key markets, that produced "more challenging results," he said.

John Shanley, an analyst for Susquehanna Financial Group, said Perez and Nike co-presidents Mark Parker and Charlie Denson indicated during a conference call after quarterly results were released that international growth could be slower during the last half of the 2005 fiscal year _ despite the 2006 Winter Olympics and World Cup Soccer championship.

The strong showing in a formerly sluggish U.S. market helps, but Nike will need to boost its global sales in order to stay on pace, Shanley said.

"The real issue is the company is not being very optimistic in terms of international presence," Shanley said.

He noted that Nike commands 42 percent of the U.S. market, despite strong competition from rival Adidas-Salomon AG, which is awaiting European regulatory approval for its $3.8 billion acquisition of No. 3 athletic shoe maker Reebok International.

"When you think about products that have a 42 percent share of anything, Nike is up in the stratosphere," Shanley said. "But that means you really have to seek growth in the international market."

Denson and Parker both said the Western European and Japanese markets may remain flat in the short term, "but we're still very optimistic about the growth potential" in the long term, Denson said.

Analysts noted that Nike has built up a large cash reserve of nearly $2.1 billion but Perez said the company was not considering any acquisitions.

"If the right opportunity presented itself, we'd take a look at it," Perez said. "But it's not a priority."

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