Nike Profits Jump 19 Percent

Nike Inc. said Tuesday profit jumped 19 percent to almost $326 million in its third quarter to easily beat Wall Street estimates as the world's largest manufacturer of athletic shoes and clothing began operating under its new chief executive, Mark Parker.

Sales increased 9 percent to $3.6 billion as Nike earned $1.24 per share - almost 13 percent better than the $1.10 per share predicted by analysts surveyed by Thomson Financial.

Nike earned $273 million on $3.3 billion in sales during the third quarter last year.

"We're very pleased with the performance of the Nike brand this quarter," said Parker, a Nike veteran named to replace William Perez after he resigned in January over differences with Nike co-founder and Chairman Phil Knight.

He said the company balanced growth in emerging markets such as Russia, China and Brazil with efforts to reinvigorate lagging markets in Western Europe and Japan - the largest markets for Nike after the United States.

"We have challenges but challenges have always made us better and stronger," Parker said.

He also said he did not anticipate any major shift in direction since he took over the top job from Perez, the first outsider ever to lead Beaverton-based Nike when he took over from Knight in December 2004.

"I don't see a significant or radical change in our overall strategy as a company," Parker told analysts during a conference call following the release of the quarterly results.

But he added there would be more emphasis on holding down costs despite anticipated spending for the upcoming World Cup soccer championship.

"It's not business as usual," Parker said.

Analysts say the strong performance is better than expected partly because U.S. sales were higher than estimated and Nike improved its cost-cutting measures.

Still, the 6 percent growth in U.S. future orders for the third quarter, compared to the same time of year in 2005, is actually a slight decline compared to recent quarters, said John Shanley with Susquehanna Financial Group.

"The thing that concerned me the most was the slowdown in the U.S. growth," Shanley said.

Nike faces increased competition from No. 2 Adidas-Salomon AG after Adidas completed its acquisition of Reebok International in January. The merger boosted the Adidas share to 21 percent compared with 36 percent for Nike in a market that accounts for half of all the athletic shoe sales in the world.

Shanley said he was also troubled by a high level of unsold inventory, but Parker and Nike Brand President Charlie Denson both said they did not expect inventory levels to have a significant effect on earnings growth.

Future orders for athletic footwear and apparel totaled $5.4 billion, up about 3 percent from the same period last year, after accounting for changes in currency exchange rates. Without the changes, future orders grew by 5.4 percent, the company said.

But orders declined 2 percent in Europe, where Parker says the company has been battling for market share in recent years.