Nike orders disappoint, shares fall

By Alexandria Sage
SAN FRANCISCO (Reuters) - Nike Inc (NKE.N) reported a worse-than-expected global decline in forward orders, especially in its European region, sending shares of the world's largest athletic shoe and clothing company down nearly 5 percent in extended trading on Wednesday.
The company, which vies with Adidas (ADSG.DE) in the global market for high-end athletic gear, warned analysts that 2010 would be challenging, with flat or slightly negative revenues.
But Chief Executive Mark Parker did talk of a "swoosh recovery," equating gradual improvement in the world economy with the upward curve of the company's logo.
"We're certainly on that longer road up to recovery," Parker said on a conference call. "But it will take awhile, let's be real."
The weak outlook overshadowed slightly better-than-expected earnings for its 2009 fiscal fourth quarter that ended May 31. Nike shares fell to $50.50 in extended trading after closing at $53.02 in regular trade on the New York Stock Exchange.
Looking to 2010, Nike sees gross margin headwinds due to currency fluctuations and Chief Financial Officer Don Blair said revenues would be flat to slightly down on a currency-neutral basis, with lower revenues in the first half of the year, particularly in the first quarter.
Nike has responded to the global downturn by slashing expenses, compensating for dwindling sales. It is cutting back on marketing, terminating orders from factories in Asia, and laying off 5 percent of global staff.
Net income in Nike's fiscal fourth quarter fell to $341.4 million, or 70 cents per share, from $490.5 million, or 98 cents per share, a year earlier.
The results included a $144.5 million after-tax charge, or 29 cents per share, related to the job cuts and a company-wide realignment involving factory consolidation.
Excluding charges, it earned 99 cents per share, above the 96 cents expected on average by analysts, according to Reuters Estimates.
BRAND CACHET
Beaverton, Oregon-based Nike -- which counts sports superstars Kobe Bryant and LeBron James among its stable of highly paid endorsers -- has weathered the downturn better than some peers, riding its brand cachet and a diverse portfolio of products sold at various prices and channels.
Still, revenue slid 7 percent in the quarter to $4.7 billion. U.S. revenues slipped 2 percent in the quarter, hurt by a lingering slump in apparel sales.
At Nike's European division, which includes the Middle East and Africa, revenues plummeted 19 percent, though they were down a more moderate 3 percent on a constant currency basis.
Sales in the Asia Pacific region were flat, and rose 3 percent excluding currency fluctuations. In China, Nike's fastest-growing region, sales rose only 6 percent, below the 60 percent growth a year ago in advance of the Beijing Olympics. Continued...
Source: Reuters