Nike Reports 20% Drop in Profit, Says Asia Woes Will Slow Sales
Sports marketing giant Nike Inc. said Thursday that profit fell 20% in the latest quarter, and it warned that sales will be slow over the next year, largely due to economic weakness in Asia.
The Beaverton, Ore.-based company said it earned $141 million, or 48 cents a share, in its fiscal second quarter ended Nov. 30, down from $176.9 million, or 60 cents, a year earlier. Revenue rose 7%, to $2.26 billion from $2.11 billion.
The earnings were well below the Wall Street consensus estimate of 55 cents a share. Nike forecast earnings of $2 to $2.15 a share for the fiscal year ending May 31.
The report was released after the close of the New York Stock Exchange, but in third-market trading Nike shares sank $3.31 to a 52-week low of $40. They had reached $76.38 earlier this year.
Despite the increased revenue in the latest quarter, Nike said earnings had been hurt by the need to slash retail prices worldwide to move inventory, which ballooned to $1.4 billion at the end of the quarter, compared with about $980 million a year earlier.
Nike said its closely watched futures orders for goods to be delivered from December through April fell to $4.2 billion, a 1% decline from the year-ago period that was blamed largely on the slowdown in Asia.
In a conference call with industry analysts and reporters, Nike Chairman and Chief Executive Phil Knight said the company had expected a slowdown after three years of strong growth but that the sudden turnabout in Asia “caught all of us a little bit by surprise.”
“Nevertheless we think structurally the company remains sound and it remains a good industry,” he said.