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Fitness financials: Nike's Q1 profit falls 10 percent, plus Hanesbrands, Collective Brands

Nike's Q1 profit fell 10 percent, Hanesbrands said it would close 9 plants and cut 8,100 jobs, and Collective Brands offered long-term growth targets.

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Nike’s Q1 profit falls 10 percent

Nike (NYSE: NKE) said its first-quarter profit dropped 10 percent as a special gain in the prior year did not recur, but sales were up, boosted by international operations.

The company said its net income decreased to $510.5 million, or $1.03 per share, from $569.7 million, or $1.12 per share, a year earlier. But the 2007 quarter included a special item that increased earnings per share by $0.20. If adjusted for the benefit, net income would have grown 10 percent.

Revenue jumped 17 percent to $5.43 billion. Changes in currency exchange rates increased revenue by 7 percentage points during the quarter.

Nike’s biggest growth continued to be in the overseas market, with revenue growth of 36 percent in the Asia-Pacific region. In the United States, which is the company’s largest market, revenue grew 8 percent to $1.8 billion for the quarter.

The company’s future orders, which investors were watching for an indication of holiday sales, were up. Orders scheduled for delivery from September through January totaled $6.8 billion, 10 percent higher than for the same quarter of last year.

Hanesbrands will close 9 plants, cut 8,100 jobs

Hanesbrands (NYSE: HBI), parent of Champion Apparel, said it will close nine plants across five countries and cut about 12 percent of its work force as it restructures its operations in order to cut costs.

The moves will eliminate the jobs of about 8,100 workers in the United States and Central America, while the company plans to add 2,000 jobs in Asia. Hanes has about 50,000 employees in 25 countries.

It is expanding production in Asia and consolidating into fewer and larger plants in lower-cost countries. The moves will cost $76 million, with about two-thirds of that recorded in the third quarter of 2008.

With the latest restructuring costs, Hanesbrands says it has now taken about $204 million of the $250 million in such charges it expects to incur in the three years following its spinoff from Sara Lee Corp. in 2006.

As part of the current restructuring the company plans to close seven plants this year. Those include sewing plants in El Salvador, Honduras and Costa Rica, as well as two yarn plants in Eden, N.C., and Gastonia, N.C., a knit-fabric textile plant in Forest City, N.C., and an inventory storage warehouse in Rockingham, N.C.

By the end of next summer, it will close a sewing plant in Mexico and its last large knit-fabric textile plant in the U.S., located in Eden.

Textile production from the plants closed will be absorbed into existing plants in Central America. Most of the sewing production from Central American plants that are closing will be moved to the company’s Vietnam and Thailand plants. Hanesbrands expects to increase its work force in Asia from 4,000 today to 6,000 by the end of 2008.

The company is also building a textile fabric plant in Nanjing, China, which is expected to begin to ramp up production in 2009 to supply fabric to the company’s expanding Asian sewing network.

Collective Brands offers long-term growth targets

Collective Brands (NYSE: PSS) said it expects long-term operating profit to grow in the mid-teens, although same-store sales may be hampered in the near term amid a difficult environment.

The company, which owns Saucony and Hind, said its operating profit forecast is based on anticipated same-store sales growth in the low single digits. It noted that as consumers cut back spending amid rising food and gas prices and a weakening economy, same-store sales might not meet the company’s long-term goal. It expects to offset sales weakness with inventory and expense control.

“While the near-term outlook remains clouded by weak consumer spending trends, we see controllable factors — supply chain reconfiguration, synergy cost savings, branding and sourcing-positioning Collective Brands for accelerated growth when consumer spending trends begin to improve,” wrote Soleil Securities Group analyst Jeffery Stein.

He kept his “Buy” rating and $25 price target on the stock.

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