Nike ‘not a footwear company alone and by itself’ says chairman and chief executive
Nike has reported that it managed to arrest the slide in its US footwear business in the fourth quarter of last year. However, weak overseas currencies and excess inventories would result in a fall in first-quarter earnings, the Beaverton, Oregon, company said.
Commenting on the results, Donald Blair, chief financial officer, said he anticipated continued earnings growth for the current year, but that this would largely come from second half earnings. In the three month period to the end of May, net income leapt from $126 million to $163 million, helped by a drop in advertising costs and resulting in a gain of 60 cents per share – slightly above analysts’ expectations.
As a result of growth in US apparel and international revenues, sales climbed by 9% to $2.5 billion with the company’s US troublesome footwear business turning in a better than expected 1% increase in revenues to $835 million.
However, Phil Knight, chairman and chief executive, noted: "We are not a US footwear company alone and by itself any more." Following a shift in the balance of the US business, he said, Nike was becoming "a true apparel company."
He went on to say that 2001 was "not a year to shout about," and gross profit margins - which have been affected by currencies and inventory overhangs - were "still not good".
On a turnover of $9.49 billion, full-year net profits were $589.7m compared with $579.1m on $9 billion the year before. The final quarter dividend is being held at 12 cents for a maintained total of 48 cents from earnings per share of $2.18, against $2.10.
Mr Blair admitted that Nike "did not execute as well as a world-class company should" but had rebounded well at the end of an "extraordinarily challenging" year.
Nike's footwear and apparel orders for delivery between June and November were up 3% year on year – approximately half the growth they would have shown had the dollar not strengthened against other currencies. And although future orders from Europe were 7% higher year on year, US orders were down 1%. Asia Pacific orders were 3% ahead and orders for the rest of the Americas were 6% up on last year’s figures. Mr Blair warned that inventory backlogs would continue into the second quarter, keeping margins under pressure.
