Nike Earnings Slip as U.S. Shoe Sales Fall

Times Staff Writer

Nike Inc. on Wednesday reported a 1.3% decline in its fiscal third-quarter earnings amid lower shoe sales in the U.S.

But the company said worldwide orders for delivery through July were up nearly 6% from a year earlier.

The Beaverton, Ore., sneaker giant posted net income of $124.7 million for the quarter ended Feb. 28, compared with $126.3 million a year earlier.

Earnings per share rose a penny to 47 cents largely because of the company's continuing stock buyback program.

Wall Street analysts were expecting Nike to report a profit of 46 cents a share, according to earnings-tracker Thomson First Call. In December, Nike said profit would be flat.

In a conference call with analysts, company executives said growth in shoe, apparel and equipment sales throughout Europe and Asia helped offset a slight decline in the company's crucial United States athletic footwear market, which posted a 1% drop in sales to $761 million.

Revenue from the Asia-Pacific region jumped 17% to $335 million. In Europe, sales rose 8% to $646 million. That helped boost overall revenue to $2.4 billion, up 6% from a year earlier.

"I thought the quarter was extremely solid," said Virginia Genereux, a Nike analyst for Merrill Lynch Global Securities in New York. "There aren't many consumer-discretionary companies that are meeting or beating estimates in this environment."

Looking ahead, Nike said orders for delivery through July were down 4% in the U.S. compared with a year ago but were up 18% in Europe and 19% in the Asia-Pacific region.

John J. Shanley, analyst for Wells Fargo Securities, cautioned that the war in Iraq may pose a challenge for Nike, especially in Europe.

The company could face an anti-American backlash once U.S. troops start rolling toward Baghdad.

"For a company like Nike that's so closely identified as being an American icon, it does cause some concern for them and concern for investors as well," he said.

Nike stock Wednesday closed at $50.08, up $1.09, on the New York Stock Exchange. The company released the results after the close of trading.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World