Nike Inc.'s (NKE) fiscal fourth-quarter earnings fell 7.6% as the maker of athletic gear continued to get hit with weaker margins and a charge related to the restructuring of its Nike brand's Western European operations, masking broad revenue growth. Shares fell 10% to $87 in after-hours trading. Through the close, the stock is down nearly 16% from an all-time high in early May. Nike, one of the world's largest sporting-goods makers, has posted improving results for more than a year. But product-cost pressures have continued to hurt margins. In the latest period, gross margin fell 1.5 percentage points to 42.8%, marking the sixth straight quarter of falling margin for the company. The decline was mostly the result of higher product costs, increased spending in its digital business and an unexpected customs assessment in an emerging market. Though Nike, known for its iconic swoosh, benefits from a diverse product slate not tied to one market, the company earlier this year warned 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 gear than expected. As of May 31, inventories were up 23% from a year earlier. For the quarter ended May 31, Nike reported a profit of $549 million, or $1.17 a share, down from $594 million, or $1.24 a share, a year earlier. The latest period included a $24 million restructuring charge related to Nike brand's Western Europe operations. Analysts polled by Thomson Reuters most recently projected per-share earnings of $1.37. Revenue increased 12% to $6.5 billion, or 14% excluding currency impacts. The company in March expected revenue growth in the low double digits on a percentage basis. The company said that its overhead expenses were up 12%. Write to Tess Stynes at tess.stynes@dowjones.com
