• Q3 profit rose 5% to $523m
  • Gross margin down to 45.8%
  • Revenues rose 7% to $5.1bn 

Shares in Nike Inc fell nearly 6% in trading yesterday (17 March) after the sportswear giant's third quarter earnings missed expectations and it warned that rising oil, cotton and transport costs are set to continue to affect its near-term profitability.

Net income in the three months to 28 February rose 5% to $523m or $1.08 per share, up from $497m or $1.01 per share a year earlier.

But higher product and freight costs combined to push Nike's gross margin down by 110 basis points to 45.8% - and were unable to offset a higher mix of full-price sales.

Revenues rose 7% to $5.1bn, led by Nike brand sales which were up 8% thanks to growth in all categories and every geography except Japan. Growth in the Converse, Cole Haan, and Hurley brands was largely offset by lower revenues in Umbro and Nike Golf.

Futures orders, an important measure of upcoming demand, are up 9% (excluding currency exchanges) for Nike athletic footwear and apparel scheduled for delivery from March through July 2011 - a total of $7.9bn. Demand is being led by emerging markets (up 18%) and Greater China (up 13%), the company said.