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Nike profit rises on strong sales

Nike Inc. on Thursday posted a higher quarterly profit on strong sales in the United States and Asia and the impact of a weak dollar.
/ Source: The Associated Press

Nike Inc. posted a 36-percent increase in third-quarter profits on Thursday in the first quarterly report since co-founder Phil Knight stepped down as CEO of the athletic shoe and clothing company.

Net income was $273.4 million, or $1.01 per share, up from $200.3 million, or 74 cents per share, in the same period a year ago. The results were aided by a 14 percent jump in revenue to $3.31 billion, up from $2.9 billion.

The profit was 2 cents per share better than the 99 cents projected by Wall Street analysts, according to Thomson First Call. Worldwide future orders jumped to $5.2 billion, nearly a 10 percent increase compared to the same quarter last year.

Analysts noted that although the biggest growth was still in Nike’s core models, the company is increasingly reaping the benefits from its other brands, including Converse and Starter.

Retailing for $40, the newest pair of Starter sneakers has allowed Beaverton-based Nike to make its first foray into a discount chain with a nationwide launch next week in 400 Wal-Mart stores.

Emerging markets in other parts of the world also showed growth, including China, where sales more than doubled in the third quarter, company officials said.

“I think one of the most important things to note is that the company is experiencing growth in all geographic regions and most product categories,” said analyst Jamelah Leddy, who tracks Nike for McAdams Wright Ragen in Seattle.

Yet new President and CEO William D. Perez — who took over from Knight two months ago — said Nike will work to improve Nike’s distribution even further.

“Given my background, it won’t surprise you to know that I place the consumer at the center of all activities,” said Perez, who juggled a wide variety of consumer product brands, including Glade air fresheners and Drano drain cleaner, when he was president and CEO of S.C. Johnson & Son Inc.

“The Nike brand’s relationship with consumers is unmatched,” Perez said. “But we have to make sure that our portfolio of brands is accessible to consumers in all channels of distribution, in all geographies and is appropriately targeted at the most attractive demographic groups. It is certainly one of the major reasons I am here.”

There were some pockets of weakness for Nike. In Japan, the company is facing heated competition from Adidas, especially at the lower end of the market where consumers have become increasingly price sensitive. And in Germany, Adidas’ home base, as well as in France, where anti-American sentiment has been strong, Nike posted disappointing results.

But overall, footwear revenue for Europe grew 6 percent and apparel jumped 15 percent. Overall in Asia, footwear grew by 7 percent, while apparel soared by 21 percent, said Don Blair, Nike’s chief financial officer.