By  on March 18, 2011

An 11 percent pickup in future orders couldn’t keep shares of Nike Inc. from stumbling in after-hours trading Thursday after the sporting goods giant reported third-quarter sales and profits that fell short of analysts’ consensus estimates.

In the three months ended Feb. 28, the Beaverton, Ore.-based firm reported net income of $523 million, or $1.08 a diluted share, up 5.2 percent from the $497 million, or $1.01, reported in the third quarter for fiscal 2010. Revenues rose 7.3 percent to $5.08 billion from $4.73 billion in last year’s quarter.

The results, reported after the close of the equity markets Thursday, fell short of consensus estimates, which projected EPS of $1.11 and revenues of $5.17 billion. The dual misses sent Nike shares down more than 6 percent in after-hours trading following an increase of 0.7 percent to $85.41 earlier in the day.

Gross margin declined to 45.8 percent of sales during the quarter from 46.9 percent in the third quarter of last year. The decline reflected higher costs for product and freight and a shift to direct distribution from licensing by Converse in the U.K.

Don Blair, chief financial officer, told analysts on the company earnings call that about two-thirds of the downward pressure on margins came from higher product costs, the majority of those from materials. The rest was attributable to air freight costs, partially mitigated by an increase in its direct-to-consumer businesses.

But Nike, which has “strategically” raised prices in recent months, according to Charlie Denson, president of Nike Brand, will do so in a more across-the-board fashion in the months ahead. “The bigger magnitude will be in the second half” of its next fiscal year, covering the spring and summer seasons, he said.

The company’s apparel business for the quarter rose 11.6 percent to $1.29 billion and was up a robust 17.9 percent, to $481 million from $408 million, in North America, a percentage jump surpassed only by the company business in Greater China, where sales rose 31.4 percent to $201 million. Apparel sales in Western Europe were down 2 percent, to $294 million, and off 9.3 percent in Japan, to $78 million.

The jump in apparel sales lifted their share of overall revenues to 25.5 percent, 1 percent more than the 24.5 percent share registered during last year’s third quarter.

Global footwear sales under the Nike brand were up 7.6 percent to $2.86 billion, representing 56.3 percent of the total.

For the nine months, net income rose 11.1 percent to $1.54 billion, or $3.16 a diluted share, from $1.39 billion, or $2.81. Revenues were up 8.3 percent to $15.1 billion from $13.94 billion.

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