Nike quarterly income tops Street

By Alexandria Sage

LOS ANGELES (Reuters) - Nike Inc. <NKE.N> said on Wednesday that quarterly profit jumped 10 percent, topping Wall Street estimates on strong U.S. demand for its footwear and robust growth overseas, sending shares up over 3 percent in after-hours trade.

"We're making some bolder, more aggressive moves with the overall portfolio than you've seen in recent years," Chief Executive Mark Parker told analysts in a conference call. "It's not just about performance now, it's about potential as well."

Nike, which recently sold its Starter apparel brand, is searching for a buyer for its Nike Bauer Hockey division and plans to acquire British soccer brand Umbro Plc <UMB.L>. But Parker said he saw no further asset sales nor acquisitions in the near term.

The world's largest athletic footwear and apparel maker said net profit rose to $359.4 million, or 71 cents per share, for the second quarter ended November 30, from $325.6 million, or 64 cents per share, a year earlier. Sales increased 14 percent to $4.34 billion.

Wall Street, on average, expected earnings of 66 cents on revenue of $4.22 billion, according to Reuters Estimates.

"Revenue growth was great, especially in the U.S.," said McAdams Wright Ragen analyst Sara Hasan. "I think people were nervous about it with the retail environment we've had."

Nike has been largely unaffected by a slump in demand for athletic shoes among U.S. mall-based retailers. The company's diverse number of brands, range of prices and sales that extend globally help it weather periods of slower spending, according to analysts.

U.S. FOOTWEAR UP, APPAREL DOWN

U.S. footwear sales rose 12 percent, but apparel revenue fell 3 percent, an issue Nike Brand President Charlie Denson said the company was addressing.

Susquehanna Financial analyst John Shanley said he interpreted the decrease as Nike's much smaller rival Under Armour <UA.N> taking market share.

For the year, U.S. revenue will rise in the mid-single digits on a percentage basis, Chief Financial Officer Don Blair said.

Global orders for delivery of shoes and apparel from this month to April of next year rose 13 percent, Nike said, or 10 percent on a currency-neutral basis. That was above two analysts' estimates.

Orders were up 19 percent, 24 percent and 21 percent in Europe, the Asia-Pacific region, and the Americas respectively, but edged up only 1 percent in the United States. Hasan cautioned the futures orders do not include about one-third of the company's products, including non-Nike brands.

Revenue gained 7 percent in the U.S., 18 percent in the European region, 17 percent in the Asia Pacific region and 19 percent in the Americas region.

Other businesses, including Hurley, Exeter Brands and Nike Golf, saw 16 percent revenue growth overall. The Converse brand posted 40 percent revenue growth, Nike said.

Gross margins increased to 44.3 percent from 43.4 percent a year earlier, helped by revenue growth, leaner manufacturing, controlled inventory and supply chain initiatives.

For the second half of fiscal 2008, Nike expects revenue growth in the low double-digit range on a percentage basis, Blair said, adding that spending will outpace revenue growth due to marketing spending in advance of the Beijing Olympics and European Football Championships.

In October, Nike said it agreed to acquire Umbro in a deal that values the company at about $570 million. Last month, the company also agreed to sell its Starter apparel brand to Iconix Brand Group <ICON.O> for $60 million.

Shares of Nike trade at 16.5 times estimated 2009 earnings, at a premium to its top rival, Germany's Adidas AG <ADSG.DE>, which trades at 14.5 times expected forward-looking earnings.

Nike shares rose over 3 percent to $66 in extended trade after closing at $63.80 on the New York Stock Exchange.

(Editing by Jeffrey Benkoe, Leslie Gevirtz)