The world's leading sport apparel manufacturer Nike reported its fiscal fourth-quarter results after Thursday's opening bell, driving shares down 12.5 percent in after-hours trading after earnings fell on higher costs despite an overall increase in revenue. The company also cited a higher effective tax rate, and increased marketing expense related to its sponsorship of the European Soccer Championships, which is ongoing, and the upcoming 2012 Summer Olympics in London as factors in the disappointing results.
Should Nike's loss in share price hold when the market opens Friday morning, it will represent an 8.5 month low for the stock as sales declined 12 percent on a year-over-year basis to just $6.5 billion. It was the first time in 18 quarters the sportswear giant missed analyst expectations, and sent shockwaves through the sports apparel business, as shares of Dick's Sporting Goods, Under Armour and Lululemon Athletica were all down more than 1 percent in after-hour trading.
In the three months ended May 31st, Nike earned $549 million, or $1.17 per share, down 8 percent from a profit of $594 million, or $1.24 a share, in the same three months of 2011. The results were even further short of the consensus estimate from economists who took part in a recent FactSet survey, who expected earnings per share of $1.37. The loss came despite a 12 percent gain in revenue, which rose to $6.47 billion, missing the average projection of $6.51 billion offered by the analysts.
For all of fiscal 2012, Nike's profits jumped 4 percent versus fiscal 2011 to $2.22 billion, or $4.73 a share, while revenue climbed 16 percent to $24.1 billion. The iconic sportswear maker announced in May it was planning on selling its Cole Haan shoe business and Umbro soccer gear unit to shave its escalating costs. The company is hoping for high sales of its new FlyKnit shoe line, which will be worn at the Summer Olympics by athletes from the US, Russia, the UK and Kenya before start showing up in stores in late July.