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Nike 4Q net income falls on high costs

Nike 4Q net income falls on high costs

Nike said Thursday that its fourth-quarter net income fell 8 percent as high product costs, a restructuring charge and an unexpected customs assessment offset revenue growth across the company.
The results fell short of analysts' expectations, and Nike Inc.'s shares plunged more than 10 percent after hours following the report.
It was a rare miss for the world's largest athletic shoe and clothing company, which has beat analyst expectations in 17 of the past 18 quarters. It comes as a number of companies are warning that slowing results in Europe and China are weighing on earnings.
Nike said its gross margin _ the amount of each dollar made in revenue that a company actually keeps _ fell as marketing expenses rose surrounding the European Football Championships and the Summer Olympics, its tax rate climbed and it faced a charge related to restructuring its operations in Western Europe. Even price hikes didn't help.
Still, CEO Mike Parker said the company delivered "solid profit growth for the year despite some headwinds in a challenging global economy, which will continue into the next year."
Nike's net income fell to $549 million, or $1.17 per share, compared with $594 million, or $1.24 per share, a year earlier. Analysts were expecting $1.37 per share, according to FactSet.
Revenue rose 12 percent to $6.47 billion, while analysts expected $6.51 billion. Nike brand revenue rose 15 percent. Revenue from other brands rose 11 percent.
Also eating into its gross margin were higher product costs, higher spending on digital business and the customs assessment in an emerging market the company didn't name. It said the cost was related to imports during the past four fiscal years.
Those expenses offset price increases, lower air freight costs and continuing cost cuts.
For the fiscal year, net income rose 4 percent to $2.22 billion, or $4.73 per share, from $2.13 billion, or $4.39 per share last year. Revenue rose 16 percent to $24.13 billion from $20.87 billion last year.
Nike, based in Beaverton, Ore., has been focusing on its most profitable businesses to drive growth. In May, it said it plans to sell two brands _ Umbro soccer gear and Cole Haan shoes and accessories _ to cut costs.
The company has introduced new products, including FlyKnit lightweight shoes, which have a top layer made with a single piece of yarn. Ultra-light, the shoes will be worn by athletes competing at this summer's Olympics for the U.S., U.K., Russia and Kenya. They will be available to the general public next month.
The company also plans on Friday to start selling Nike+ technology-equipped basketball and training shoes, which collect data on the wearer's athletic performance and send it to mobile apps.
Its shares fell $10.06, or 10.4 percent, to $86.83 after hours. They had ended regular trading at $96.89, down $1.22, or 1.2 percent. They have traded between $76.98 and $114.81 over the past 52 weeks.


Updated : 2021-01-25 12:37 GMT+08:00