Nike profits rise 15%; shares slide on low global orders

12/21/05 - newratings.com

NEW YORK, December 21 (newratings.com) - The world's largest athletic shoe company Nike Inc (NKE) Tuesday announced a 15% increase in its quarterly profits. The company’s share price came under pressure, however, due to lower-than-expected global orders.

The Beaverton, Oregon-based company reported its net income for the three months ended November 30 at $301.1 million, or $1.14 per share, up from $261.9 million, or 97¢ per share, in the year-ago quarter. Nike’s revenues for the fiscal second quarter stood at $3.47 billion, up 10% from $3.15 billion in the year-ago period. The company’s net income and revenue results topped the average expectations of the Wall Street analysts on robust US demand for high-end athletic footwear. Nike said, however, that its gross margins had contracted during the quarter partly on account of high transportation costs.

The company reported weaker-than-expected worldwide orders for athletic footwear and apparel for delivery between December 2005 and April 2006, which rose 2.5% to $5.2 billion. While orders in Europe declined 6%, those in the Americas and the Asia Pacific region rose by 23% and 2%, respectively, Nike said.

Nike’s share price slid 3.5% to $85.40 in after hours trading on the New York Stock Exchange on Tuesday.