Nike, the athletic shoe and clothing giant, has reported a rebound in sales.

The company said it had lifted revenue to $2.5bn (�1.8bn) in the fourth quarter of its business year, up from $2.3bn in the same period of the previous year.

Profits were up 29% at $163m, at the top end of analyst expectations, as cost controls took effect.

In the previous quarter, Nike had reported a substantial fall in sales and warned that future profits might be hit by higher leather prices caused by the foot-and-mouth disease outbreak in the UK.

Profits had also suffered from the US economic slowdown, as fewer Americans bought new shoes.

In the fourth quarter, US footwear sales climbed 1% to $835m, surprising analysts most of whom had predicted another fall.

First quarter profit warning

"Our fiscal 2001 results reflect a year in which we delivered 5% revenue growth for the year, despite significant foreign exchange pressure and continued weakness in our largest business, US footwear," said chief executive Philip Knight.

Full-year revenue stood at $9.5bn, against $9bn the previous year.

Full-year net profits were $590m compared with $579m last time.

US footwear sales - viewed as a key indicator of Nike's fortunes - were down 4% to $3.2bn over the year.

Mr Knight said Nike entered its 2002 business year with "a sense of pragmatic optimism" although first-quarter profits were likely to be down on the year-earlier quarter.

This was partly because of excess stocks and the adverse affect of a strong dollar on Nike's non-US businesses.

Nike said it expected profit growth to be generated in the second half of the year.