(June 27) -- Nike Inc., the world's largest athletic-shoe maker, fell the most in more than seven years in New York trading after reporting a drop in U.S. profit because it spent more to market new sneakers.

Nike dropped $6.47, or 9.8 percent, to $59.50 at 4 p.m. in New York Stock Exchange composite trading, the biggest drop since February 2001. Pretax income in the U.S. fell 10 percent to $390.7 million in the three months that ended May 31. U.S. orders through November were unchanged.

``My main concern was what is happening in the U.S. market,'' John Shanley, a Susquehanna Financial Group LLLP analyst, said in an interview yesterday. ``It doesn't paint a very optimistic picture.''

Selling and general costs as a percentage of sales were the highest in at least 10 years, according to data compiled by Bloomberg, hurt by increased promotional spending before the Beijing Summer Olympics and a weaker U.S. dollar. The company said in a conference call after earnings were released that marketing spending will rise more quickly than sales next year.

Nike has declined 7.4 percent this year. Adidas AG, the world's second-largest sporting-goods maker, dropped 1.68 euros, or 3.9 percent, to 41.10 euros in Frankfurt, leaving it with a 19 percent decrease in 2008.

Lower Taxes

Nike's fourth-quarter net income rose more than analysts estimated on a drop in taxes, and sales beat analysts' projections as Asian revenue surged 39 percent. Profit climbed to $490.5 million, or 98 cents a share, from $437.9 million, or 86 cents, a year earlier, the Beaverton, Oregon-based company said in a statement. Revenue rose 16 percent to $5.1 billion.

Ten analysts surveyed by Bloomberg estimated average profit of 97 cents a share. Nine analysts projected sales of $4.97 billion.

Selling, general and administrative costs gained 33 percent in the quarter, exceeding the projections of Shanley and Caris & Co.'s Claire Gallacher.

Nike said U.S. expenses rose because of the debut of its training shoe in March. The company got its shoe to market before smaller rival Under Armour Inc.'s similar product, which was advertised during the National Football League's Super Bowl, one of the most-watched U.S. television events of the year.

The earnings decrease doesn't mean the U.S. market is less profitable, Nike Brand President Charlie Denson said on the conference call.

U.S. Profitability

``We're not seeing an erosion of margins in the U.S.,'' Denson said. ``We had some targeted price increases, and there was no resistance on the consumer side. We feel really good about profitability in the U.S. at this point.''

Sales in China, the world's fastest-growing major economy, surged as consumers there bought shoes and athletic gear ahead of this summer's Olympic Games.

Nike sold its Bauer Hockey unit earlier this year after buying Umbro Plc, a maker of soccer attire, to pursue a strategy focused on six areas including basketball and women's fitness. Nike gets more than half its sales outside the U.S.

Orders were up 10 percent in Europe, Africa and the Middle East. The Asia-Pacific region climbed 31 percent. Overall, orders for delivery of products through November rose 11 percent. Gallacher estimated growth of at least 9 percent.

``The double digits in Europe and Asia will be a positive impact,'' Steven Baumgarten, an analyst at PNC Capital Advisors in Philadelphia, said yesterday in a Bloomberg Television interview. ``That is where their growth is.''

Nike reaffirmed its sales forecast of a ``high-single digit'' increase for the year that ends May 31. Marketing spending will grow ``somewhat faster'' than sales, finance chief Don Blair said on the call.

Chief Executive Officer Mark G. Parker, 52, reorganized the company in 2006 to shift the focus away from product types such as jerseys. The change came as Nike lost market share to Baltimore-based Under Armour in selling polyester workout clothes.

(Editor: Haijing Qu)