Nike (NKE) earnings Q1 2023

A woman shops for shoes in the Nike Factory Store at the Outlet Shoppes in El Paso, in El Paso, Texas on November 26, 2021.

Paul Ratje | AFP | Getty Images

Nike On Thursday, it said it had delivered a strong fiscal first quarter despite supply chain issues, as well as lower sales in Greater China, its third-largest market by revenue.

Like other retailers, Nike has faced supply chain headwinds such as increased shipping costs and delays in recent quarters. The company said its inventory levels swelled in the quarter compared to the year-ago period.

Shares of the company fell about 5% in after-hours trading.

Here’s how Nike fared in its first fiscal quarter compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: 93 cents vs. 92 cents expected
  • Revenue: $12.69 billion vs. $12.27 billion expected

Nike said its net profit for the three months ending August 31 fell 22% to $1.5 billion, or 93 cents per share, from $1.87 billion, or $1.18 per share, a year earlier.

Revenue during the period rose 4% to $12.7 billion from $12.2 billion a year earlier.

Recently, Nike has changed its strategy and is looking to sell its sneakers and other merchandise directly to customers and reduce what is sold through wholesale partners like Foot Locker. The company said Thursday that its direct sales increased 8% to $5.1 billion and sales of its digital brand increased 16%. On the other hand, Nike’s wholesale sales increased by 1%.

In its first fiscal quarter, Nike said inventory rose 44% to $9.7 billion on its balance sheet from the same period last year, which the company said was driven by supply chain issues and partially offset by strong consumer demand.

Total sales in Greater China fell 16% to around $1.7 billion from nearly $2 billion a year earlier. The company has faced disruption to its business in the region, where Covid lockdowns have affected its business. Nike had said in the prior quarter that it expected issues in Greater China to weigh on its business.

Meanwhile, total sales in North America, Nike’s biggest market, rose 13% to $5.5 billion in the fiscal first quarter, from around $4.9 billion in the same period l last year. The sneaker giant has consistently said that consumer demand, especially in the US market, hasn’t waned despite inflation.

Read the company’s earnings release here.

This story is developing. Please check for updates.

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