BEAVERTON, Ore. - Nike Inc. shares rose 4.3 percent yesterday after the world's largest athletic-shoe maker said profit increased more than expected because of higher U.S. sales and fewer discounts.
Sales of Nike shoes in the United States rose for a second-straight quarter as the company focused on sneakers priced below $90 while demand for more costly shoes such as the $200 Air Jordan XVII has lagged behind projections.
The company's gross margin widened to 40.3 percent of sales from 37.7 percent as Nike reduced the amount of products it kept in stock to avoid cutting prices.
"They are doing what they say they are going to do," said Steve Barker, an analyst at Public Employees Retirement System of Ohio, which has $50 billion in assets, including Nike shares.
Founder and Chief Executive Officer Philip Knight emphasized lower-priced shoes when he named Charles Denson and Mark Parker co-presidents of the Nike brand, and Gary DeStefano president of U.S. operations in March 2001.
U.S. shoe sales, the company's biggest business, had dropped in five of the past six quarters, with the only quarterly gain coming after Nike reduced prices to clear out inventory.
Fourth-quarter net income climbed 28 percent to $208.4 million, or 77 cents a share, from $162.7 million, or 60 cents, a year earlier, the company said in a statement. Sales increased 8 percent in the quarter that ended May 31 to $2.68 billion. Profit was more than the 75-cent average estimate of analysts surveyed by Thomson Financial/First Call.
The shares climbed $2.23 to $53.65. Nike had dropped 8.6 percent this year.