Executive says Nike already benefiting from World Cup as economies emerge from recession

Executive: Nike already benefiting from World Cup

LONDON — A Nike Inc. executive said Thursday that the U.S. sports outfitter is cautiously optimistic about overall trading prospects for the year, with sales of its soccer gear already up dramatically ahead of this year’s World Cup.

Brand president Charlie Denson said that total revenue growth will likely mirror a global economic recovery, with the 32-nation World Cup in South Africa helping extend the company’s lead over rival Adidas.

Denson declined to put a figure on Nike’s expected sales of soccer-related products for this year but said that “from a revenue standpoint, we feel we’re the biggest and best football (soccer) company in the world.”

Adidas, which is sponsoring 12 of the teams at the June 11-July 11 World Cup as well as the event itself, has forecast beating 2008’s record sales of soccer-related products of €1.3 billion ($1.8 billion).

The Nike logo will be on the shirts of nine competing nations.

“Our football numbers going into the world cup are up dramatically,” Denson told The Associated Press in London, where the company was launching a new boot and team shirts ahead of the tournament.

Nike, the world’s largest athletic shoe and clothing company, bought England team sponsor Umbro in 2007, a key acquisition to a stable that includes Brazil, Portugal and Holland. It also takes over sponsorship of the French team from next year, after besting Adidas for the contract in 2008.

“We feel very good about where we are,” Denson said. “We feel very good about our competitive position with regards to them and everybody else in the game.”

Denson was speaking at the unveiling of Nike’s nine World Cup team shirts, which are being made from polyester retrieved from recycled bottles from landfill sites.

Each shirt contains the plastic from eight bottles, with 13 million being used to make the shirts that will be worn by players and fans of teams including Brazil, the Netherlands and the United States.

Nike says the process reduces energy consumption by 30 percent compared to using new polyester, but the company has yet to decide whether subsequent shirts will be made in the same way once the initial manufacturing run has been sold.

The initiative is designed to help influence consumers who may still be wary of the brand following allegations in the 1990s that it used factories in developing countries that violated labor laws and exploited their work force.

“Some of the labor issues that the brand was under fire for 15 years ago, that legacy seems to live forever in a lot of regards,” Denson said. “But when you look at what brands stand for today and the way the young consumer interacts and embraces brands, transparency is a paramount piece of the puzzle.

“This goes to consumer expectations of brands they want to associate themselves with and connect with.”

Nike reported a 4 percent fall in profit to $375.4 million, or 76 cents per share, in the fiscal second quarter. Tight inventory and cost controls helped it withstand an 8 percent decline in revenue to $4.4 billion.

Denson said was cautiously positive about the outlook, and stressed emerging markets growth.

“We will probably see our growth mirror the economic recovery,” he said. “Right now we’re seeing positive growth coming out of China.”

“Our emerging markets business continues to outperform,” he said.

He added that the U.S. seemed to be “relatively stable,” with the two toughest markets continued to be central and eastern Europe and Japan.