Ahead of the Bell: Nike Inc. declines

NEW YORK (AP) — A rare disappointment in company earnings and concerns about the global economy are sinking Nike Inc. shares.

Shares slid 10 percent Friday in premarket trading, one day after the world's largest athletic shoe and clothing company said net income dropped 8 percent in its fiscal fourth quarter. Nike said profits declined on high product costs, a restructuring charge and an unexpected customs assessment, offset partially by double-digit revenue growth across the company.

CEO Mark Parker warned analysts that the global economy remains on shaky ground with fluctuating commodity and labor costs. China, which has driven economic growth overseas, also is likely to grow more slowly, Parker said.

Wall Street analysts cut profit forecasts and price targets for Nike following its report. However, some analysts still see Nike as a sound investment, saying it remains in a good position to ride out the rough economy.

Citi Investment Research analyst Kate McShane maintained a "Buy" rating for Nike, noting that it continues to generate strong revenue, and that revenue is expected to grow over the next five years. The Beaverton, Ore., company also is expected to continue to repurchase its shares, boosting the value of outstanding company stock.

Nike shares also have dropped about 11 percent in the past three weeks, and it's "now trading at compelling levels," McShane said.

In premarket trading, shares traded at $86.85, down $10.04. Nike has traded between $76.98 and $114.81 over the past year.