Tags: nike | profit | shares | fall

Nike Profit Shy of Estimates; Shares Fall 11%

Thursday, 28 June 2012 05:37 PM

Nike Inc missed quarterly profit estimates for the first time in at least two years as high spending and costs of raw materials used in its shoes and T-shirts hurt margins, sending its shares down 11 percent.

The company also saw some tempering in demand, especially in China. Futures orders, which are a closely watched metric for its swoosh-marked products, rose 7 percent. That is less than half of the rise in the third quarter.

Analysts and investors have been worried about a cooling in demand, especially in China, as footwear trends typically last about two to three years and Nike is almost at the end of that cycle.

The company earned $549 million, or $1.17 cents a share, in the fourth quarter ended May 31, compared with $594 million, or $1.24 a share, a year ago.

"While we had expected some gross margins decline and some increase in spending with the Olympics and soccer championships, both are higher than expected," said Morningstar analyst Paul Swinand.

Gross margins fell 150 basis points in the quarter.

"The recovery in the gross margin is something that continues to elude them," said Camilo Lyon, analyst with Canaccord Genuity.

The analyst said the numbers showed that Nike was not immune to the slowdown that was hitting other brands.

Analysts, on average, had been expecting the company to earn $1.37 share, according to Thomson Reuters I/B/E/S.

Revenue rose 12 percent to $6.5 billion.

Shares of Nike, based in Beaverton, Oregon, were down 11 percent at $86.19 Thursday after the bell. They closed at $96.89 on the New York Stock Exchange.

© 2018 Thomson/Reuters. All rights reserved.

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Thursday, 28 June 2012 05:37 PM
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