NEW YORK — Nike Inc.’s earnings surged 46.2 percent in the second quarter, fueled by robust sales growth in the U.S. and abroad, a favorable European exchange rate and improved margins.
However, clothing was a slight disappointment for the Beaverton, Ore.-based athletic giant, with U.S. apparel revenues slipping 3 percent to $384.7 million, primarily because of the expiration of Nike’s license with the NBA, the firm said Thursday.
In the second quarter, ended Nov. 30, Nike’s income climbed to $261.9 million, or 97 cents a share, from $179.1 million, or 66 cents last year, exceeding analysts’ expectations of 86 cents a share. Revenues gained 11 percent to $3.15 billion from $2.84 billion in last year’s second quarter.
The world’s largest athletic company has been on a roll for the last year, thanks to heightened brand awareness around the globe, better operational management and a strategy of product and category diversification that has allowed it to reduce risk.
Philip Knight, chairman, chief executive officer and president, said in a statement: “Nike’s second-quarter revenues and earnings per share reached all-time high levels as a result of our solid performance across our global portfolio. Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favorable European exchange rates, helped drive much of this growth.”
Knight, Nike’s co-founder, will step down as president and ceo at the end of December, and his position will be taken over by William D. Perez, who had been president and ceo of S.C. Johnson & Son Inc. Knight, 66, will remain at Nike as chairman.
Knight said the U.S. market has been “particularly robust.” Revenues in the U.S. grew 5 percent to $1.13 billion, driven by gains in footwear and equipment. In Europe, the Middle East and Africa, revenues jumped 13 percent to $961.1 million, and were up 17 percent to $483.5 million in the Asia-Pacific region. In the Americas, revenues surged 23 percent to $189.3 million. All of these regions except the U.S. saw revenue growth in footwear, apparel and equipment.
Other revenues, which include sales from Converse, Nike Golf, Nike Hockey, Cole Haan, Hurley International and the Exeter Brands Group LLC gained 12 percent to $382.4 million.
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In a sign of its continued operational improvements, margins were up 1.8 basis points to 44.1 percent compared with 42.3 percent, while selling, general and administrative expenses were down slightly to 30.9 percent of revenues from 31.8 percent.
Nike said that future orders for athletic footwear and apparel, scheduled for delivery from December 2004 through April 2005, were up 10 percent in the U.S., 6 percent in Europe, 14 percent in Asia-Pacific and 15 percent in the Americas.
The company’s shares gained 5 cents to $85.60 on Thursday. The results were reported after the market closed.
For the sixth-month period, earnings gained 33.7 percent to $588.7 million, or $2.18 a share, from $440.3 million, or $1.64 a share. Revenues were up 14.5 percent to $6.71 billion.
During the quarter, Nike also repurchased 626,300 of its shares for $48.6 million as part of a four-year share repurchase program.