The sports good giant Nike Inc has announced that its earnings slumped by 20% in the last quarter and is warning that sales will be slower than expected next year mostly due to Asia's economic problems.

Nike said it earned $141m, or 48 cents a share, in its fiscal second quarter ending November 30. This was down from $176.9m, or 60 cents a share, a year earlier. Revenues rose 7% to $2.26bn from $2.11bn.

The earnings were well below the Wall Street consensus of 55 cents a share, and Nike predicted at least two more quarters of declining earnings resulting in net income of $2 to $2.15 a share for the fiscal year ending May 31, compared with a consensus estimate of $2.60.

Despite the increased revenues in the latest quarter, Nike said, earnings had been hurt by the need to slash retail prices to try and shift its inventory - which ballooned to $1.4bn at the end of the last quarter, compared with about $980m the year before.

Nike said total advance orders, for deliveries from December to April, are down 1% decline from a year ago period - the company said was a clear signal of a slowdown in revenue growth to levels below previous expectations.

Nike's investment in Asia includes sponsoring Tiffany Milbrett who plays soccer in Japan

Hardest hit were orders in the Pacific Asia region which are 12% lower than a year ago.

Phil Knight, the company's Chairman and Chief Executive Officer, said: "This slowdown in futures orders clearly signals that revenue growth in the second half of fiscal 1998 will be below our previous expectations.

"This is largely a result of the slowdown in the Asia Pacific market, where we now anticipate more moderate revenue growth in fiscal 1998."

He also announced that the Nike board had approved a four-year, $1bn share repurchase scheme.

Industry analysts said they had been braced for bad news from Nike, but the predicted impact on future sales and profits was worse than expected.

Analyst Shelly Young of Hambrecht and Quist said: "I think there's no question this is a significant surprise to most of the street. I think the most alarming issue is the level of inventories. That's a lot of tennis shoes."
 

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