Nike Inc. (NKE: Quote), the world's largest maker of athletic shoes and apparel, said Thursday after the markets closed that its fourth quarter profit fell 8% from last year, as lower gross margin, increased SG&A spending, a higher effective tax rate and a restructuring charge more than offset a 12% increase in revenue.
The company's quarterly earnings per share also came in below analysts' expectations as did its quarterly revenue.
Nike shares are currently losing 10.62% in after hours trading after closing the day's regular trading session at $96.89, down $1.22 or 1.24%. The shares trade in a 52-week range of $76.98 to $114.81.
The company has managed to increase sales in North America, China and emerging markets in recent quarters, but its gross margin continues to be hurt by higher product costs.
Fourth quarter revenue from North America, the company's largest market, increased 13% year-over-year to $2.4 billion, while revenue for Western Europe grew 2% to $1.0 billion and Central and Eastern Europe revenue rose 12% to $330 million.
Revenue for Greater China surged 18% to $667 million in the fourth quarter, while Japan revenue increased 11% to $240 million. Fourth quarter revenue from emerging markets climbed 16% to $670 million.
Revenue from the company's other businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, Nke Golf, and Umbro Ltd., increased 16% to $896 million in the fourth quarter. Nike said late last month that it plans to divest the Cole Haan and Umbro businesses to sharpen its focus on driving growth in the Nike, Jordan, Converse and Hurley brands. The process of divesting the two businesses is expected to be complete by the end of the company's fiscal 2013.
Gross margins for the quarter fell to 42.8% from 44.3% a year ago, due mainly to higher product costs, increased investments in the company's digital business and an unanticipated customs assessment in an emerging markets territory related to imports that occurred during four previous fiscal years.
Selling and administrative expenses for the fourth quarter rose 12% to $2 billion, with demand creation expenses up 23% due to marketing support for key product launches, the European Football Championships and the Summer Olympics.
For the fourth quarter ended May 31, 2012, the Beaverton, Oregon-based company reported net income of $549 million or $1.17 per share, compared to $594 million or $1.24 per share for the year-ago quarter.
The latest quarter results include a $24 million charge related to NIKE Brand's Western Europe restructuring.
On average, 19 analysts polled by Thomson Reuters expected the company to earn $1.37 per share for the fourth quarter. Analyst' estimates typically exclude special items.
Revenues for the fourth quarter rose 12% to $6.47 billion from $5.77 billion in the same quarter last year. Excluding changes in currency exchange rates, fourth quarter revenues grew 14% from a year earlier. Seventeen analysts had a consensus revenue estimate of $6.51 billion for the fourth quarter.
For the fourth quarter, footwear sales rose 12% to $3.7 billion, while apparel sales increased 10% to $1.6 billion and equipment sales surged 20% to $327 million.
Worldwide future orders for Nike brand athletic footwear and apparel, scheduled for delivery from June through November, rose 7% from last year.
During the fourth quarter, Nike repurchased 2.3 million shares for about $245 million as part of its four-year, $5 billion share repurchase program, approved by its board in September 2008. As of the end of the fourth quarter, the company has purchased a total of 50.3 million shares for about $4.1 billion under that program.
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by RTT Staff Writer
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