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International Gains Spur Nike First-Quarter Apparel Sales

BEAVERTON, Ore. -- Sales of athletic apparel at Nike advanced 2.1 percent in the fiscal first quarter to $179.9 million from sales of $176.2 million a year earlier.<BR><BR>Providing the lift was a 13.5 percent gain in international apparel revenue,...

BEAVERTON, Ore. — Sales of athletic apparel at Nike advanced 2.1 percent in the fiscal first quarter to $179.9 million from sales of $176.2 million a year earlier.

Providing the lift was a 13.5 percent gain in international apparel revenue, which grew to $85.1 million in the quarter ended Aug. 31 from $75 million. Sales of apparel in the U.S. declined 6.4 percent, amounting to $94.7 million against $101.2 million.

In a conference call with financial analysts, Nike president Richard Donahue commented on the falloff in U.S. sales in the quarter, saying, “The apparel drop is just a slow start. Futures are very strong and year-to-year comparisons should be strong. The downturn in apparel has stopped.”

In a statement, Nike said of its futures orders for the next five months, “Our U.S. apparel orders are very strong, indicating a return to healthy growth after two years of slight declines.” Nike apparel rang up sales of $338.5 million in the U.S. in the most recent fiscal year ended May 31, down 6.1 percent from sales of $360.5 million in fiscal 1993.

Nike officials declined to specify figures for apparel bookings.

Asked what had stemmed the U.S. sales slide, a Nike spokesman credits the fact that, late in the last calendar year, apparel was reorganized as its own stand-alone business.

Overall, apparel generated 15.4 percent of Nike’s first-quarter revenue, compared with 15.9 percent in the first quarter a year ago.

Nike’s earnings in total fell 7.1 percent in the quarter, to $106 million, or $1.43 a share, versus $114.1 million or $1.49. As reported, Nike had projected its first-quarter earnings would range from $1.35 to $1.45 a share, falling short of the $1.45 to $1.75 analysts had estimated. Executives cited inventory shortages and first-quarter spending levels in Asia and Europe as reasons.

Companywide revenue in the first quarter increased 6.4 percent to $1.17 billion, from $1.11 billion, bolstered by market-share gains in several footwear categories. Sales expanded 55 percent in outdoor, 31 percent in walking, 27 percent in tennis, 17 percent in cross-training, and 11 percent in running.

Nike’s selling, general and administrative expenses rose to 25 percent of first quarter sales from 21.6 percent a year ago. Nike blamed the increase on its costs abroad and said that it expects this year’s SG&A expenses to equal or possibly even slightly exceed last year’s 25.7 percent.

Consolidated gross margins for the quarter were 40.2 percent, up from 39.7 percent last year. Inventories were off 26 percent, excluding inventory at new Nike-owned operations. U.S. inventory was down 46 percent at the end of the first quarter.

Nike brand footwear and apparel revenue in the U.S. hit $749.9 million, an increase of 4 percent. International athletic footwear and apparel revenue grew 13 percent to $361.6 million. Sales of other brands, which include Cole-Haan, Tetra Plastics and Sports Specialities, slid 8 percent to $58.9 million, reflecting in part the absence of revenue from Nike’s sport casual division, which was discontinued last September.

– Fairchild News Service