Nike profit: It’s gotta be the shoes

By James Ledbetter

If this is a recession, it’s a bizarre one. Everybody was all gloomy about the phone business on Wednesday, figuring that buying fancy new phones is one of those luxuries that the cash-strapped consumer can easily kick into the next quarter or longer. But today comes news that Nike (NKE) - in some people’s minds the quintessential purveyor of unnecessarily expensive item - has seen a third-quarter net income leap of 32% over last year. The stock got such a pop that it had to suspend trading for a bit.

A closer reading of the numbers reveals something very intriguing, both about the Nike brand and the state of the world economy. U.S. sales were up a respectable but modest 5%, and orders for delivery between March and July up a meager 1%. But sales in Europe were up 23% and in Asia 27%, indicating that Nike has skillfully parlayed the Beijing Olympics this summer into sales. (Nike doesn’t always sponsor the Olympics directly, but spends heavily to associate itself with individual athletes, which in China seems to work.) Sure, when the dollar is tanking it’s especially helpful to be selling shoes abroad, but there’s more than currency fluctuation at work here. Even if Nike shoes aren’t manufactured in America any more, we’re still good at manufacturing brands, and it’s a lovely paradox that in an economic downturn, we’re still remarkably good at convincing the rest of the world that they want to dress like Americans.