Andrew Bell: Well Nike’s third quarter profit beat the street; earnings were up 35 per cent. For a look at what’s keeping Nike on top, here’s Rick Wolfe, president of PostStone Corporation. Rick, thanks for coming in.

Rick Wolfe: My pleasure.

AB: Incredible numbers from Nike, beating analysts’ expectations by 11 cents. Revenue from Europe surging, profit from there up more than 20 per cent. What’s Nike doing right these days?

RW: I think that the maturity of their business, the fact that they’ve figured out their supply chain and that they continue to innovate - the new ideas they’re coming up with are as powerful as the ideas that they started with 20 years ago. The decline in the U.S. dollar has done great things for them.

AB: That’s interesting too. Adidas having terrible trouble with Reebok, the sportswear company that they bought for more than $3 billion more than a year ago. They’ve been shuffling management over there, apparently they got into a row with Foot Locker. Presumably that’s helping Nike out as well.

RW: It would. Adidas is trying to go through all the pain of a merger in a business where internal culture, internal brand is as important as the external brand. So there will be lots of people at Reebok mourning the fact that they were bought by a competitor. It’s going to take them a while to sort that out.

AB: What about China, the Beijing Olympics, how crucial is this? Both Nike and Adidas opening stores across China, a huge focus, a nexus for their marketing, is the Beijing Olympics.

RW: The Olympics are important but not crucial. I think that the growth of China is more important. Of course, Olympics is one of the key parts of their marketing campaign, but they have other brands, they have such an integrated marketing program that even if something goes wrong with the Olympics I would expect only a small blip in their results.

AB: It’s interesting as well, the active wear market in America is worth about $18.5 billion dollars. I’m looking at some of the retail press there. Men’s active wear sales went up seven per cent in the latest year. It was a slower rate of increase, but it’s a growing segment. I thought we were all becoming grey and crumbly and sitting around in slippers. It’s not working like that though.

RW: Well, grey and crumbly and determined to stave it off. I don’t know about you, but I got myself a Wii!

AB: Yeah, that’s right, the boomers are trying to fight off advancing age, and it’s a very hot segment to be in right now, just as incomes improve in the emerging world. What about P.R.? I mean, they’re always going to have that, not stigma, but always that P.R. problem with the labour conditions in China. They just released a report themselves, I mean that’s commendable I guess, talking about it publicly. They found shady practices.

RW: And I think that the whole thing went down just as they would want it to. They got ahead of the story. They said that because of the Olympics they were going to do a special country report on China, and the country report found big problems. And then they said, “No different from what we experience anywhere else around the world.” I’m reminded of a comment made by a top lawyer for a company in a similar business, made to me personally a number of years ago. He said, “Look, we work extremely hard to make sure that every one of our factories operates under the best circumstances, and yet we know that somewhere in the world, every single day, something is happening that we wouldn’t want to happen. And we just have to manage that and we have to be ready for it.” So one of the dimensions of the P.R. was that the watchdog organizations commended Nike for the way they’ve been handling it.

AB: At least they did it, they’ve brought a yardstick instead of just clamming up. Is there any way they could go wrong, will there ever be a consumer rebellion, people would go with lululemon or brands that are seen as being closer to the community, maybe?

RW: Well, Nike in fact works very hard to be in the community with their local running programs. I think that Lululemon and Under Armour and other similar companies will nibble away at Nike, but Nike is so much bigger than everybody else that I think we have to think of them as Coke, and there’s no Pepsi. So they have this massive domination of their category. That domination is going to last them 10 years, 20 years. My crystal ball doesn’t go that far out. Will somebody figure out a way to crack the Nike dominance someday? Probably. It’s a long way off.

AB: Rick ,thanks very much, an amazing story. Thanks very much for coming in.

RW: My pleasure.

AB: That was Rick Wolfe, president of PostStone Corporation.