Double-digit gains in Nike Inc.’s apparel business and increased marketing — or “higher demand creation spending,” in company parlance — for the World Cup and other programs contributed to a more than 50 percent boost in fourth-quarter profits.

This story first appeared in the June 24, 2010 issue of WWD. Subscribe Today.

In the three months ended May 31, the Beaverton, Ore.-based sports footwear and apparel giant generated net income of $521.9 million, or $1.06 a diluted share, 1 cent above analysts’ estimates and 52.9 percent higher than the $341.4 million, or 70 cents, registered in the final quarter of 2009. Excluding noncash restructuring charges in the year-ago quarter, net income and EPS would have increased 7 percent, the firm said.

Sales in the quarter grew 7.7 percent to $5.08 billion from $4.71 billion and would have risen 4 percent without favorable currency shifts, Nike said. Benefitting from better in-line margins, fewer closeouts and growth and improved profitability in its stores and “other businesses” segment, gross margin jumped to 47.4 percent of sales from 43.4 percent a year ago.

Leading the surge in top-line growth was the firm’s apparel business under the Nike banner, which rose 13 percent to $1.32 billion in the quarter, versus 6.6 percent growth in its dominant footwear business to $2.75 billion. Revenues rose 3.8 percent in North America, to $1.76 billion, and were up in all regions but Japan, where volume slid 7.7 percent to $260.6 million, a decrease that grew to 12 percent when currency changes were excluded. Business in emerging markets was up 47.2 percent to $556 million.

Earnings before interest and taxes rose 40.2 percent to $685.3 million despite a 2.4 percent dip in Nike brand EBIT to $795.3 million. EBIT at the firm’s other businesses more than compensated for the flagship brand’s shortfall, rising 71 percent to $72.5 million.

The firm reported the future order position of the Nike brand was ahead 7 percent, or 10 percent without currency fluctuation.

For the full year, net income was up 28.3 percent to $1.91 billion, or $3.86 a diluted share, while revenues dipped 0.8 percent to $19.01 billion. Nike said net income would have been lifted 2 percent without restructuring and impairment charges.

On the company conference call, Mark Parker, president and chief executive officer, noted that affiliate brands including Hurley and Converse “contributed more than $2 billion in revenue” and that revenues from the company’s stores and online business increased to nearly $2.5 billion.

Also on Wednesday, Rite Aid Corp. reported that it narrowed its first-quarter loss, thanks to a decline in selling, general and administrative costs and lower charges related to store closings.

The firm reported a net loss of $73.7 million, or 9 cents a diluted share, 5 cents better than the analyst consensus estimate, versus a loss of $98.4 million, or 11 cents a share, in the year-ago quarter. Sales for the three months ended May 29 came in at $6.39 billion, a 2.1 percent slide compared with $6.53 billion in the prior year.

At the company’s annual meeting Wednesday, John Standley, president, succeeded Mary Sammons as chief executive officer of the firm. Sammons remains chairman until June 2012.

The firm attributed the quarterly sales decline to store closings and a 1 percent decline in same-store sales. Front-end comparable-store sales were off 1.3 percent.

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