Nike Fourth-Qtr. Net Slips 5% as Sales Rise

For the year, the company's top and bottom line experienced significant growth.

NEW YORK — Weighed down by a one-time charge relating to an arbitration ruling, Nike Inc. posted a 5 percent decline in fourth-quarter earnings on an 8 percent sales gain, which was buoyed by strong apparel and footwear sales.

For the year, the company’s top and bottom line experienced significant growth.

On Tuesday, Nike said its net income for the period ended May 31 dropped to $332.8 million, or $1.27 a diluted share, from $349.5 million, or $1.30 a diluted share, in the same period last year on sales that rose to $4 billion from $3.7 billion. The one-time charge, which relates to an arbitration ruling for the Converse brand, cut into earnings per share by 12 cents. Including the charge, EPS results matched Wall Street analyst estimates.

For the year, profits rose 15 percent to $1.4 billion, or $5.28, from $1.2 billion, or $4.48, in the prior year on sales that climbed 9 percent to $15 billion from $13.7 billion.

“With deeper focus on discrete segments of our business, strong connections with consumers through global initiatives such as Joga Bonito, and compelling product innovations such as Air Max 360, we delivered very strong earnings growth and record revenues for the year,” said Mark Parker, president and chief executive officer, in a statement.

During the fourth quarter, U.S. sales increased 10 percent to $1.5 billion, with footwear revenues rising 10 percent to $993.7 million and apparel up 18 percent to $395.7 million. The activewear group saw sales and profits increase in all regions for the full fiscal year.

“We deepened our brand leadership in core categories such as basketball and soccer, and experienced strong growth in key markets such as the United States, Latin America, China and Russia,” said Parker.

Sales at the company’s “other business” sectors, which include Converse, Cole Haan, Hurley International and Exeter Brands, grew 13 percent to $595.5 million from $529.2 million last year. Worldwide futures orders surged 5 percent higher than last year, totaling $6.6 billion. Gross margins declined, dropping in the fourth quarter to 43.8 percent from 45.2 percent, and for the year falling to 44 percent from 44.5 percent.

This story first appeared in the June 28, 2006 issue of WWD.  Subscribe Today.