Nike's (NKE) and Others' Catch-22

Shoe and apparel companies are in a difficult situation, as revealed by Nike (NYSE:NKE) in its latest quarterly report.

They are still dealing with a weak economy while at the same time facing rising commodity prices.

That means those selling shoes, clothing and accessories will continue to struggle, as they have a choice of shrinking margins or raising prices which will result in lower sales.

Even though there is a temporary reprieve from the price of oil, it's very doubtful that will continue, and recent history as proven we're approaching levels where consumers take not of their spending at these gasoline price levels, especially as they close in on $4 a gallon.

Guidance from Nike into 2012 is they see gross margins falling 300 basis points year over year for the rest of this fiscal year.

The majority of other retailers in these segments will experience the same, especially in relationship to rising cotton and transportation costs.

Nike was trading at $77.46, falling $7.95, or 9.31 percent, as of 12:38 PM EDT.