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Today's news...6/27/05

JUNE 27, 2005 -- Nike FY Sales Top $13 Billion

In FY05, Nike revenues increased 12% to $13.7 billion, compared to $12.3 billion in FY04. Changes in currency exchange rates contributed three percentage points of this growth, while the acquisition of Converse and Starter added one point. Full year net income was up 28% to $1.2 billion, or $4.48 per diluted share, versus $945.6 million, or $3.51 per diluted share, in FY04.

4Q revenues increased 7% to $3.7 billion, versus $3.5 billion for the same period last year. Three percentage points of this growth were the result of changes in currency exchange rates. 4Q net income was up 15% to $349.5 million, or $1.30 per diluted share, compared to $305.0 million, or $1.13 per diluted share in the prior year.

Commenting on the company's results, William Perez, president/CEO, said, "Fiscal 2005 was a great year. The strength of the Nike brand around the world, the breadth of our Nike, Inc. portfolio, and the quality of our management team contributed to another year of consistent, profitable growth for our shareholders. The Nike brand is exceptionally strong, driving full-year revenue gains across all regions and product lines, while Converse and Cole Haan led the growth in our portfolio of other businesses. Today's record earnings were driven by healthy revenue growth and the highest gross margin in the company's history.

"Looking ahead, our worldwide futures orders for athletic footwear and apparel are strong, up 9.5%, with all regions posting increases and U.S. footwear remaining particularly healthy. We're very pleased with the brand strength reflected in these futures results and we see continued potential for profitable expansion across our portfolio of businesses."

The company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June through November 2005, totaling $6.3 billion, 9.5% higher than such orders reported for the same period last year. Approximately one point of this growth was due to changes in currency exchange rates.

By region, US futures were up 9%; Europe increased 7%; Asia Pacific grew 11%; and the Americas increased 25%. Changes in currency exchange rates had a favorable impact of two percentage points in Europe and Asia Pacific. Changes in currency exchange rates had no impact on futures orders growth for the Americas.

During 4Q, US revenues increased 3% to $1.3 billion. US athletic footwear revenues increased 7% to $907.2 million. Apparel revenues declined 7% to $335.9 million. Equipment revenues increased 17% to $84.3 million. Pre-tax income for the quarter rose 9% to $311.8 million.

For the FY, US revenues were up 7% to $5.1 billion. Footwear revenues increased 9% to $3.4 billion; apparel revenues grew 2% to $1.5 billion; and equipment revenues grew 13% to $313.4 million. US pre-tax income improved 12% to $1.1 billion.

4Q revenues for the EMEA region grew 4% to $1.1 billion. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 9% to $689.6 million, apparel revenues declined 4% to $366.1 million and equipment revenues declined 2% to $73.0 million. Pre-tax income rose 10% to $254.2 million.
For the full year, EMEA revenues grew 12% to $4.3 billion, compared to $3.8 billion last year. Seven percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 12% to $2.5 billion. Apparel revenues increased 12% to $1.5 billion and equipment revenues rose 9% to $284.5 million. Pre-tax income increased 23% for the full-year to $917.5 million.

In the Asia Pacific Region, quarterly revenues grew 19% to $535.0 million. Three percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues were up 16% to $269.8 million; apparel revenues increased 21% to $210.6 million and equipment revenues grew 32% to $54.6 million. 4Q pre-tax income was up 36% to $124.0 million.

Full-year Asia Pacific revenues increased 18% to $1.9 billion. Four percentage points of this growth were the result of changes in currency exchange rates. Footwear revenues increased 13% to $962.9 million. Apparel revenues were up 23% to $755.5 million. Equipment revenues increased 25% to $178.9 million. Pre-tax income increased 13% to $399.8 million.

Quarterly revenues in the Americas region increased 20% to $201.1 million. This growth rate reflected a six percentage-point increase due to changes in currency exchange rates. Footwear revenues were up 18% to $134.4 million, apparel revenues increased 20% to $53.2 million and equipment revenues increased 36% to $13.5 million. Pre-tax income was up 11% to $29.2 million.

For the full year, Americas revenues increased 15% to $695.8 million, compared to $604.5 million last year. One percentage point of this growth was the result of changes in currency exchange rates. Footwear revenues increased 17% to $478.6 million, apparel revenues grew 6% to $169.1 million and equipment revenues increased 31% to $48.1 million. Pre-tax income rose 21% for the full year, to $117.6 million.

In 4Q, Other revenues, which include results for Bauer Nike Hockey, Cole Haan, Converse, Exeter Brands Group, Hurley International and Nike Golf, grew 6% to $529.2 million. For the full year, other revenues increased 22% to $1.7 billion. Pre-tax income declined 2% in 4Q and increased 104% for the FY.

In 4Q, gross margins were 45.2% of revenue compared to 43.8% last year. For the FY, gross margins were 44.5% compared to 42.9% last year. Selling and administrative expenses were 30.6% of 4Q revenues, compared to 29.8% last year. For the full year, selling and administrative expenses were 30.7% of full year revenues versus 30.2% last year.

At fiscal year-end, global inventories stood at $1.8 billion, an increase of 10% from last year. Cash and short-term investments were $1.8 billion at fiscal year-end, compared to $1.2 billion last year.

Kurt Wolf, a long-time employee of K2 in Europe, died of cancer at the age of 65. Most of his career at K2 was served in its headquarters in Penzberg, where he was MD of both K2 Germany and Europe. Wolf was also a SVP of the corporation…Swedish investors, led by a former top Microsoft exec in Scandinavia, has acquired Optimus, the camping store company. The holding company, Thinkout AB, may be interested in additional outdoor acquisitions...Lowa manufactured 1.7 million pairs of shoes last year. Sales were flat at EUR 97 million. Of the total, EUR 87 million came from the brand. The remainder came from sales of Rollerblade, Nordica, Think Pink and X-Socks, all Tecnica brands distributed by Lowa in Germany. (source: SAZ)


Volcom will likely go public this week. The IPO is greatly oversubscribed. The action sports company plans to offer 4.7 million shares at $15 to $17.


Financial Systems Innovation LLC, a wholly owned subsidiary of the Acacia Technologies group, entered into a non-exclusive license covering a patent that applies to credit card fraud protection technology with Foot Locker. The patented technology generally relates to a computerized system for protecting retailers and consumers engaged in credit card, check card, and debit transactions. The system includes an electronic card reader, and the generation and use of a transaction number, which specifically identifies each transaction processed within the system. As a result, the retailer does not necessarily have to print detailed information concerning the cardholder's identity or account number on the customer's receipt.


Everlast Worldwide entered into a licensing agreement with New York City-based Sports Accessories Group for the production and marketing of a line of Everlast men's, children's and unisex bags, including backpacks, sports bags, duffel bags, luggage, and roll bags. The line, which is expected to be launched this fall, will be sold through sporting goods retailers and department stores throughout the US, its territories and possessions.


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