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Nike: Margins and Profit Fall, Shares Plunge

The company faces higher costs and slipping demand overseas


Nike (NYSE:NKE) earned $549 million during its fiscal fourth quarter, down from $594 million in the same period last year. EPS for the fourth quarter was $1.17, compared to $1.24 last year. That badly missed Wall Street’s forecast of $1.37 a share, according to Reuters.

Investors pummeled the stock. Nike shares tumbled more than 9% in early trading on Friday.

Nike Expectations High Ahead of Earnings
Nike Expectations High Ahead of Earnings

The company said revenue for the quarter was $6.5 billion, up 12% from 2011, but profits were hit by higher materials costs. Gross margins fell 1.5% in the fourth quarter.

Rising inventories in Europe and China suggested to analysts that the company might have to discount some products to reduce stocks. Demand also declined overseas, particularly in China, where orders for future delivery rose just 5% during the fourth quarter, compared to 24% during the same time last year.

Overall orders for products scheduled for shipment between June and November rose just 7%, down more than 50% from future orders placed in the third fiscal quarter.

Article printed from InvestorPlace Media,

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