SAN FRANCISCO (Reuters) - Nike Inc. (NYSE:NKE - news) posted a 15 percent rise in quarterly profit on Monday on strong sales of high-priced sneakers like its Shox running shoe, but a cautious revenue forecast helped drive down the company's shares 4 percent.
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The No. 1 athletic shoe maker's profit topped the Wall Street consensus target, but some investors were disappointed as the company posted its slowest revenue rise in nine quarters and apparel sales fell in the United States and Europe, analysts said.
Net income rose to $349.5 million, or $1.30 per share, in the fourth quarter ended May 31, from $305 million, or $1.13 per share, a year earlier.
The per-share earnings were 3 cents better than the average forecast among analysts polled by Reuters Estimates.
In a conference call, Nike said it still expects high single-digit revenue growth for fiscal 2006, but forecast a first-quarter increase toward the low end of the expected range of 7 percent to 9 percent.
Nike shares have risen about 13 percent since the middle of April and are trading well above the 52-week low of $68.61.
"There may have been expectations for a blow-out quarter," said John Shanley, an analyst at Susquehanna Financial Group.
A recent fashion shift to premium athletic shoes like the Shox running shoe and ever-popular Air Jordan line has padded profits at companies like Beaverton, Oregon-based Nike, analysts said.
According to marketing firm NPD Group, demand for athletic shoes that cost more than $100 a pair GREw 18 percent in the United States last year, to almost $600 million.
This is especially good news for Nike, whose share of the lucrative U.S. market is more than twice that of each of its largest rivals -- Reebok International Ltd. (NYSE:RBK - news) and Adidas-Salomon (ADSG.DE).
Nike shares trade at 17.7 times estimated 2006 earnings, compared with 10.9 for Reebok and 14.3 for Adidas, according to Reuters Estimates.
Nike's fourth-quarter revenue rose to $3.7 billion from $3.5 billion as demand GREw across all regions and the weak dollar helped boost the value of overseas sales.
In the United States, the company's No. 1 market, revenue increased 3 percent to $1.3 billion, including a 7 percent rise in U.S. athletic footwear revenue to $907.2 million.
This was the lowest increase in any region as the expiration of a licensing aGREement with the National Basketball Association hurt U.S. apparel sales, the company said.
Asia-Pacific revenue rose 19 percent to $535 million, while revenue in the Europe-Middle East-Africa region increased 4 percent to $1.1 billion.
Revenue from the company's other brands, such as Cole Haan, Converse and Hurley, rose 6 percent, to $529.2 million. The gains in the non-Nike lines come as the company attempts to look beyond its core U.S. business to boost sales.
Worldwide orders for athletic footwear and apparel for delivery from June through November, a key indicator for the company, increased 9.5 percent from a year earlier, to $6.3 billion. Future orders in the United States rose 10 percent.
Gross margin rose to 45.2 percent from 43.8 percent, and on the conference call, Nike said it expects higher gross margin for 2006, driven by continued foreign exchange benefits and a tighter supply chain.
The results come a day before William Perez, who recently replaced Nike co-founder Philip Knight as chief executive, was expected to provide more details on the company's performance and future strategy at an analyst meeting in New York.
Nike shares fell $3.71, or 4.15 percent, to $85.64 in afternoon trading on the New York Stock Exchange.
