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Nike posts higher profit
2006-12-20
Nike Inc. (NYSE:NKE), the world's largest maker of athletic footwear and clothing, said on Wednesday that quarterly net profit rose nearly 8 percent, helped by a tax benefit and global sales growth. Fiscal 2007 second-quarter net income rose to $325.6 million, or $1.28 per share, compared with $301.1 million, or $1.14 per share, a year earlier. Revenue rose 10 percent in the quarter to $3.82 billion from $3.47, Nike said. Wall Street analysts, on average, had been expecting the Beaverton, Oregon-based company to post earnings of $1.13 on a net and adjusted basis on revenue of $3.76 billion. Earnings were boosted by 13 cents per share due to a tax agreement with the Dutch government that included a retroactive tax benefit. Shares fell less than 1 percent in extended trade after closing at $99.78, up nearly 4 percent, on the New York Stock Exchange. In the United States, Nike's No. 1 market, sales rose 8 percent, while European sales rose 6 percent. In the Asia-Pacific region, sales rose 15 percent. Forward orders for footwear and apparel scheduled for delivery from December through April 2007 rose 7 percent, Nike said in a statement. Nike's introduction of lower-priced styles this year to meet demand abroad and in the United States has meant more promotions and more investment spending and has narrowed profit margins in recent quarters. But in the second quarter, gross profit margins were relatively flat compared with a year earlier. Costs rose to 32 percent of revenues compared to 30.4 percent in the year-ago period. Nike, whose shares as of Wednesday's close have risen 16 percent since January, is valued at 15 times 2008 earnings, at a premium to its main rivals, Germany's Adidas AG (ADSG.DE) and Puma (PUMG.DE), whose forward-looking price-to-earnings ratios are nearly 14 and 14.6, respectively.
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