Nike hit by rising costs and slowdown Nike's fourth-quarter profit fell unexpectedly as new product launches and sporting events such as the upcoming Olympics failed to offset a rise in costs and slowdowns in Europe and China. The results triggered an 13 per cent fall in Nike shares in after-hours trading on Thursday to $84.40. The US sportswear group reported an 8 per cent decline in net income for the three months ended May 31 from a year earlier to $549m or $1.17 cents a share. This fell short of consensus forecasts of quarterly earnings of $1.37 for the quarter. Total revenues increased 12 per cent to $6.5bn, falling slightly below expectations. But total sales and administrative expenses also rose 12 per cent to $2bn, due to high product costs, an increase in the effective tax rate and increased marketing expenses surrounding the Euro 2012 football competition and the London Olympics. The latest period included a $24m restructuring charge related to the group's western European operations. Mark Parker, chief executive, said the group delivered "solid profit growth for the year despite some headwinds in a challenging global economy." He said he expected "persistent challenges into 2013," including commodities and labour costs, currency pressure, especially in Europe, and slower growth in China. In the fourth quarter, gross margins at the Oregon-based group fell 1.5 percentage points to 42.8 per cent, marking the sixth straight quarterly fall. Margins were also affected by higher spending on the group's digital business and a customs assessment in an emerging market that the company did not name. It said the cost was related to imports during the past four fiscal years. For the full year, Nike reported a 4 per cent rise in net income and a 16 per cent rise in total revenues. Total expenses, however, rose 11 per cent. Nike this year warned that inventories were higher than planned in some markets - notably apparel in Europe and China - leading to questions about whether it would need to discount more merchandise than expected. As of May 31, inventories were up 23 per cent from a year earlier. Future orders, a key measure for the group, rose 7 per cent compared with a year ago. In May, Nike announced plans to exit from its Cole Haan and Umbro brands, its first planned divestitures in about four years, as the company aimed to focus on its Jordan, Converse and Hurley brands. Cole Haan and Umbro contributed $797m to the top line in 2012. By category, footwear and apparel sales jumped 12 per cent and 10 per cent for the quarter, while the equipment unit saw a 20 per cent rise. Ahead of its results Nike shares ended regular trading at $96.89, down 1.2 per cent.