By  on June 28, 2005

NEW YORK — Nike Inc. continued to sprint in the fourth quarter with a 15 percent rise in profits, but its apparel sales lost some zip in the U.S. and Europe.

The lag in activewear sales, a more cautious outlook for the first quarter of the current year and concern about business in Japan and some European regions caused the athletic giant's shares to slide $3.58 Monday to close at $85.77 on the New York Stock Exchange.

Nike expects high-single-digit sales growth in 2006, but first-quarter revenues will be at the low end of the 7 to 9 percent projected growth range, Donald Blair, Nike's chief financial officer, said on a call with analysts Monday.

Nike's fourth-quarter profits climbed to $349.5 million, or $1.30 a share, from $305 million, or $1.13, and exceeded analysts' expectations of $1.27. Results were aided by higher gross margins and strong sales in Asia and South America, as well as robust global footwear sales. Gross margins were 45.2 percent of revenues in the quarter, up from 43.8 percent last year helped by tight cost controls.

Nike's total revenues rose 6.7 percent to $3.72 billion from $3.49 billion in the quarter. While the company saw strength in nearly every product sector and region in the fourth quarter, apparel was a slight disappointment in the U.S. and Europe. Apparel revenues slipped 7 percent in the U.S to $335.9 million, and were down 4 percent in Europe, the Middle East and Africa, or EMEA, to $366.1 million.

For the year, profits surged 28.1 percent to $1.21 billion, or $4.48, from $945.6 million, or $3.51. Revenues grew 12 percent to $13.74 billion, from $12.25 billion, and were up in all regions and product categories.

"The strength of the Nike brand around the world, the breadth of our Nike Inc. portfolio and the quality of our management team contributed to another year of consistent, profitable growth for our shareholders," said William D. Perez, Nike's new president and chief executive officer, in a statement Monday. "The Nike brand is exceptionally strong, driving full-year revenue gains across all regions and product lines, while Converse and Cole Haan led the growth in our portfolio of other businesses."

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