Nike’s Earnings Decline 5% After Charge in License Case

Nike Inc. said Tuesday that fiscal fourth-quarter profit fell 5% after a one-time charge, and its shares slipped in late trading as the company posted a decline in its unfilled orders for Latin America.

Nike’s net income in the quarter ended May 31 fell to $332.8 million, or $1.27 a share, from $349.5 million, or $1.30, a year earlier. Sales rose 8% to $4 billion.

Excluding the charge for a previously announced arbitration ruling dealing with its Converse brand shoe, Nike’s profit rose 4% and amounted to $1.39 a share, meeting Wall Street analysts’ expectations, according to Reuters Estimates.

One analyst said some investors had been hoping that the company’s earnings would beat expectations, and that a decline in unfilled orders for the Americas region, one of Nike’s top performers, was worrisome.

“There were bullish expectations that they’d blow through the quarter’s earnings results and have stronger forward order momentum, but that clearly is not the case,” said Susquehanna Financial Group analyst John Shanley, explaining the after-hours share price fall.

Beaverton, Ore.-based Nike, whose primary rivals are Germany’s Adidas-Salomon and Puma, enjoys strong demand in the U.S., its No. 1 market, but has struggled recently amid dwindling demand in Europe and Asia, where a consumer shift to lower-priced footwear has led to increased promotions and has pressured gross margins.

In the United States, Nike’s sales rose 10%, while European sales rose 2%, led by apparel sales. In Asia, sales rose 4%.

The company said its total orders for athletic footwear and apparel scheduled for delivery from June to November were up 5% over the same period last year.

Sales of Nike’s other subsidiary brands, such as Converse, Hurley and the upscale Cole Haan shoe label, rose 13% in the quarter. Last week, Nike named former Gap Inc. executive Lee Bird to head those businesses. The company also last week announced a $3-billion stock buyback program.

Nike’s shares fell to $81.88 in after-hours trading after closing at $83.63, down 62 cents.