Nike (NKE) Gets Tripped Up by Rising Costs and Shrinking Margins

Shares of footwear giant Nike (NKE: Charts, News) plunged last week after the retailer posted weaker than expected fourth quarter earnings. Nike reported earnings of $1.17 per share on revenue of $6.5 billion.

Analysts had expected Nike to earn $1.37 per share. EPS fell 7.6% while revenue grew 12% from the prior year quarter. Excluding foreign currency fluctuations, revenue rose 14%. A strong top line failed to appease nervous investors, who forced the stock to give up all its gains over the past twelve months. Nikeâ s stock performance now notably trails its stronger, younger athletic wear competitors, such as Under Armour (UA: Charts, News), Lululemon (LULU: Charts, News) and Foot Locker FL (FL: Charts, News). Daily Chart
Stock Analysis Nike attributed its weak bottom line to higher than expected costs and shrinking margins. During the fourth quarter, Nike posted a $24 million restructuring charge from its operations in Western Europe. Nikeâ s â

Published on Jul 2, 2012
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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