Nike (NKE) on Thursday reported fourth-quarter net income fell nearly 8% on lower gross margins. The stock fell more than 10% in after-hours trading.
The world’s largest athletic apparel retailer reported net income of $549 million, or $1.17 per diluted share in the quarter ended May 31, down from $594 million, or $1.24 per diluted share, during the same three-month period a year ago.
The numbers failed to meet analysts’ expectations of $1.37 per share.
Fourth-quarter revenue rose 12% to $6.5 billion from $5.8 billion a year ago. Nike cited higher revenues across all areas of its business for the rise in quarterly sales.
The Beaverton, Ore., company said inventories as of May 31 were up 23% compared with the same time in 2011.
Mark Parker, Nike’s chief executive, said in the company’s earnings statement that Nike “delivered solid profit growth for the year despite some headwinds in a challenging global economy, which will continue into the next year.”
The company said gross margin declined 150 basis points to 42.8% due to higher product costs, increased investments in Nike’s digital business and an unanticipated customs assessment in an emerging market.
“These factors more than offset the positive effects of price increases, lower air freight due to improved factory deliveries, as well as ongoing product cost reduction initiatives,” Nike said in its earnings statement.
The shares closed down $1.22, or 1.24%, at $96.89 in the regular session and were changing hands at about $87 in after-hours trading.