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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Nike Reports Record Revenues, Earnings

Associated Press

Wrapping up a turbulent quarter in which it was lampooned by “Doonesbury” and saw its stock price plummet, Nike reported record revenues and earnings for the fourth quarter and for the year.

Nike, the world leader in athletic shoes and apparel, said Tuesday it earned $155.8 million, or 52 cents per share, on revenues of $2.37 billion in the quarter ended May 31. The figures compare with earnings of $133.7 million, or 45 cents per share, on revenues of $1.85 billion last year.

“By any standard of measure, fiscal 1997 was the greatest performance in our 25-year history,” said chairman and chief executive Philip Knight.

While the quarterly report fell within the range of 51 cents to 56 cents per share Nike predicted in May, earnings were far short of analysts’ initial expectations of 69 cents for the quarter.

Nike’s prediction of lower-than-anticipated earnings sent the stock price down 13.5 percent, to $55.37-1/2, May 29 on the New York Stock Exchange. The stock closed Tuesday at $58, off 37-1/2 cents. Nike released earnings after trading ended.

Nike said in May that earnings would fall short of estimates in part due to lower than estimated revenues caused by product shortages, a slight increase in U.S. order cancellations and the timing of shipments in Europe.

“We are going to see a slowdown in the overall, bottom-line results with this company,” said Jennifer Black Groves, a stock analyst with Black & Co. in Portland. Revenue growth in 1998 will slow from the 40-plus percent of recent years to about 17 percent. Nike might have saturated the domestic market.

Black Groves said that international sales are on the verge of exploding, which should be enough to counterbalance a domestic slowdown.

“Maybe it won’t hit until the end of fiscal 1998,” she said. “But it will hit.”

Tuesday, Nike said worldwide futures orders for athletic footwear and apparel scheduled for delivery between June and November hit record levels, rising 18 percent over the same period last year to $4.9 billion.

Knight said revenues from outside the United States continued to grow faster than domestic sales, a trend Nike expects to continue as the brand gathers momentum overseas.

Nike said sales increased 70 percent last year in its Asia Pacific region, 38 percent in Europe and 44 percent in the Americas outside the United States. The company reported U.S. revenue growth of 44 percent.

In Japan, Nike’s largest market outside the United States, sales increased 93 percent, or 122 percent when adjusted for constant dollars. Overall, earnings for the year increased 44 percent to $796 million, or $2.68 per share, on sales of $9.2 billion, a 42 percent increase.

Based on the strong futures orders, Knight said Nike believes it is poised for another record year of revenues and earnings in 1998.