NEW YORK (AP) - Nike said Thursday its fiscal first-quarter net income fell 12 percent as the boost from higher sales was offset by increased costs and ad spending. At the same time, the company is facing a slowdown of future orders of its products, particularly in China.
The world's largest athletic shoe and clothing company's results beat expectations but shares fell 3 percent in aftermarket trading as investors worried about a slower pace of futures orders, which are orders from retailers of products that are scheduled for delivery between September 2012 and January 2013.
Futures orders rose 6 percent during the quarter, down from a 16 percent increase in the same quarter last year. The decline was more dramatic in China: There, futures orders fell 5 percent, compared with a 27 percent increase a year ago.
CEO Mark Parker said in a call with analysts that the decline in orders was partially due to the company's efforts to clear excess inventory in the region and retool its offerings there to adapt to the changing tastes of the Chinese consumer.
Nike executives said they are working to come up with fits that are more tailored to the Chinese consumer, a better balance of casual sportswear and more expensive technical performance gear. It is also working with retailers to improve its distribution in China.
"China defies predictions or timetables," Parker said in a call with analysts. "But what is certain is that China offers more opportunity for Nike today than it ever has, and I'm completely committed to extending our leadership position there."
Elsewhere, Nike, like other consumer products makers, is facing high costs for materials and labor, as well as an uncertain economy in Europe. The Beaverton, Ore.-based company has raised prices and cut costs in response.
Net income for the three months ended Aug. 31 fell to $567 million, or $1.23 per share. That compares with net income of $645 million, or $1.36 per share, last year. Analysts expected the company to earn $1.12 per share
Revenue rose 10 percent to $6.67 billion from $6.08 billion last year. Analysts expected $6.43 billion.
A strong spot was North America, Nike's largest market, where revenue jumped 23 percent to $2.7 billion, with strength across all categories.
In Europe, revenue fell 5 percent to $1.17 billion. In China, revenue rose 8 percent to $572 million.
Selling and administrative expenses rose 18 percent as the company spent heavily during what it calls "the summer of sport" on marketing for the Olympics and the European Football Championships.
After finishing the day up 51 cents at $96, shares fell $3.10, or 3.2 percent, to $94 in aftermarket trading.
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