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Footwear Trends, Asia Knock Nike’s Earnings Down 92%

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<i> From Bloomberg News</i>

Nike Inc. said its fiscal fourth-quarter profit dropped 92%, hurt by weak consumer demand in Asia and shifting footwear trends, before a charge that resulted in a bottom-line loss.

The world’s largest seller of athletic footwear said earnings before the charge dropped to $11.8 million, or 4 cents a diluted share, from $155.8 million, or 52 cents, a year earlier. Revenue fell 2.8% to about $2.31 billion in the quarter ended May 31 from about $2.37 billion.

Nike’s footwear sales in the U.S. fell 11%, to $854.6 million from $956.7 million, continuing a slide that began last year when teenagers began favoring dressier shoes such as Hush Puppies. The trend, which has also hurt rivals such as Reebok International, persisted in the latest quarter, as Nike’s U.S. orders dropped again.

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“I’m concerned about the U.S. sales,” said Peter Russ, an analyst at Laidlaw Global Securities. “I don’t see things rebounding as early or as quickly as I expected.”

Nike, known worldwide for its swoosh logo and spokesman Michael Jordan, was expected to earn 3 cents a share, according to analysts surveyed by First Call Corp.

The company’s fourth-quarter U.S. footwear inventory fell 11% from May 31, 1997, and dropped 10% from Feb. 28, 1998, the end of the company’s third quarter.

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Total orders for delivery between June and November of this year fell 13% to $4.2 billion from the year-earlier period. U.S. orders dropped 11%, European orders rose 11% and Asia-Pacific orders fell 54%. Orders from the Americas fell 15%.

The results for the latest quarter exclude a charge of $79.5 million, or 27 cents a diluted share.

Nike shares fell 56 cents to close at $48.69 on the New York Stock Exchange. The company reported its results after the close of trading.

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