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Nike net income rises despite increased pressure on margins

Sportswear giant Nike has reported a 13.8% rise in fourth quarter earnings compared to the same quarter last year.

In the three months to the end of May 31 Nike said its net income was €594m (£371.7m) up from the €522m (£326.7m) for the same quarter in 2010.

Sales progressed at a similar pace, growing 13.6% to $5.77bn (£3.61bn) up from $5.08bn (£3.18bn) in the same quarter the previous year.

The rise in sales and net income came despite a 20.3% increase in operating costs to $3.21bn (£2.01bn) up from $2.67bn (£1.67bn) the previous year. The sportswear giant said the reasons for this increase were higher product costs, higher freight costs, higher inventory obsolescence reserves and higher royalties paid for endorsed team merchandise.

Nike emphasised that some of the pressure on freight was a result of strong demand for certain Nike brand products, which necessitated shipment by air.

“In fiscal year 2011, we delivered exceptional results in extraordinary times,” said Mark Parker, Nike chief executive. “Our business is organized to drive growth across multiple brands, geographies and categories as we manage through the ever-changing macroeconomic landscape.”

Nike said that in the quarter operating income rose in the US and China and in emerging markets, but fell in Europe and Japan, in the latter case dropping 67%.

Apparel sales in the quarter were up 8.4% to $1.44bn (£0.9bn) while footwear jumped 18.6% to $3.26bn (£2.04bn).

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