Footwear Stocks Fall as NIKE Sees Lower Margins (NKE, DECK, CROX, SHOO)
Shares of footwear companies slid along with NIKE, Inc. (NYSE:NKE), after the company projected that profit margins may fall 100 bps in the fourth quarter of fiscal 2012. In the third quarter, the company reported gross margin narrowed by a bigger-than-expected 2 percentage points and that inventory surged 32%.
The company posted third quarter profit of $560 million, or $1.20 a share, as compared to $523 million, or $1.08 a share, a year earlier. Revenue increased 15% to $5.85 billion. Analysts expected earnings of $1.17 a share on revenue of $5.82 billion.
Sales growth was strongest in greater China and emerging markets, while North America also posted a double-digit gain. However, Gross margin declined to 43.8% owing to higher product costs. Selling and administrative expenses grew at a lower rate than revenue, up 10% to $1.8 billion.
The Effective tax rate was 27.3%, as compared to 26.0% in the same period last year. The increase was due to the adjustment of a deferred tax asset related to foreign operations and changes in reserves this year.
During the third quarter, a total of 2.5 million shares were repurchased for approximately $239 million as part of the company’s four-year, $5 billion share repurchase program, approved by the Board of Directors in September 2008.
Nike declined 2.85% to $107.83 on 3.61 million shares. The 52 week trading range for the company is $75.62 – 112.97. NIKE is engaged in design, development and marketing of footwear, apparel, equipment and accessory products. NIKE is a seller of athletic footwear and athletic apparel in the world.
Othe losers include, Crocs, Inc.(NASDAQ:CROX) slid about 2% to $20.32, Deckers Outdoor Corp(NASDAQ:DECK) fell 0.80% to $66.22 and Steven Madden, Ltd.(NASDAQ:SHOO) decreased 1.42%.