Nike earnings up 31 percent in third quarter

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Posted 8:34AM on Friday, March 22, 2002

BEAVERTON, Ore. - A reduction in worldwide inventory and heavier promotion of lower-priced athletic shoes has helped Nike Inc. boost its third-quarter profits by 31 percent. The company on Thursday reported earnings of $126 million, or 46 cents a share. Nike earned $97 million, or 35 cents a share, during the third quarter of its previous fiscal year. Sales for the quarter were up 4 percent to $2.3 billion, compared with $2.2 billion last year. Nike Chairman Phil Knight said the company trimmed global inventory by 5 percent over the past 12 months while orders for delivery between March and July increased 6 percent over the same period in 2001. "In that time, we have managed the turnaround of our largest business, U.S. footwear," Knight said. Shoe sales in the U.S. market increased 7 percent to $784 million. Revenue for all Nike products in the United States was up 5 percent to $1.2 billion, compared with $1.1 billion in the same period the previous year. Analysts have said repeatedly that Nike must improve its domestic sales of basketball shoes and other athletic equipment to increase total revenue, which has been flat since the late 1990s. Knight attributed much of the improved U.S. sales to a management shakeup last March that promoted veteran executives Charles Denson and Mark Parker to co-presidents of the Nike Brand division, which account for the bulk of the company's sales. "It's really been a great testimony to their leadership and management that we've made so much improvement over the last 12 months," Knight said. In recent years, Nike focused on higher-end shoes that retail for as much as $200, but the economic downturn has increased demand for lower-priced models, such as the $70 women's Air Visi Mazy cross-trainer and the $55 Ace 53 casual shoe, analysts said. Nike representatives said, however, that the company is just as pleased with sales of the high-end Michael Jordan and Vince Carter basketball shoes introduced during the quarter. Knight said the Winter Olympics added to Nike's profile, and that expanding the Nike equipment line with golf clubs endorsed by Tiger Woods also helped. Last month, Nike again expanded its product line with the purchase of California surfwear manufacturer Hurley International for an undisclosed amount. ------ On the Net: Nike Inc.: http://www.nike.com