• Q1 net income fell 12% to $567m
  • Sales increased 10% to $6.7bn 
  • Gross margin declined 80 basis points to 43.5%

Sportswear brand Nike recorded a decline in first-quarter net income as profits and orders in China slumped.

In China, the company recorded a 4% decline in EBIT over the quarter ended 31 August to US$164m. Sales in the country grew 8% to $572m.

The outlook for China is also challenging, with future orders from September until January 2013 down 5%.

Speaking about the group's position in China, Nike brand president Charlie Denson told analysts: "The consumer is becoming more discerning and sophisticated.

"They want clearer choices, more innovation and better services tailored to them. At the same time, the economy is slowing, creating short-term impacts for any company doing business there. Certainly retailers are seeing profit challenges as the industry works to absorb excess inventory."

The company saw net income fall 12% to US$567m over the quarter as revenue increased 10% to $6.7bn, rising 15% on a currency neutral basis.

Gross margin declined 80 basis points to 43.5%. The company said gross margin continued to benefit from pricing actions and product cost reduction initiatives. However, this was more than offset by higher input costs, primarily materials and labour. It said margins were also affected by a shift in the company's mix to lower margin businesses within the Nike brand.