Nike shares fall as earnings per share and revenue fall

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  • The sports giant proved analysts’ projections wrong for earnings per share and revenue, but shares fell dramatically.
  • Nike inventory in North America increased by 65%.
  • The company expects the stronger dollar to cost it $4 billion in the current fiscal year.

Nike said on Thursday that its quarterly profits were reduced due to increased logistics spending and product markdowns, as the company pivots in a rapidly changing consumer market and under pressure from inflation.

The sports giant proved analysts’ projections wrong for earnings per share and revenue, but shares fell dramatically due to excess inventory in North America and a stronger dollar.

Nike expects the stronger currency to cost the company $4 billion in the current fiscal year, chief financial officer Matthew Friend said on a conference call to discuss fiscal 2023 first-quarter results. of the company.

Profit for the quarter that ended Aug. 31 was $1.5 billion, down 22%, but the resulting earnings per share beat expectations. Revenue rose four percent to $12.7 billion.

As sales continued to decline in Greater China, a market severely impacted by Covid-19 limitations, Nike saw bumper sales in its other three regions, including a 13% increase in North America.

In its home market, other stores are offering deals as shoppers react to higher prices for gas, groceries and more.

Conversely, Nike’s inventory in North America rose 65%, reflecting an increase in advance purchases by retailers concerned about supply chain delays and improved delivery times.

According to Friend, Nike continues to see strong consumer demand for desirable products, but is working to shed a surplus of older, less popular items.

On a conference call with analysts, Friend said, “We are focused on selling our end-of-season apparel inventory.”

Neil Saunders, chief executive of consultancy GlobalData, called Nike’s performance “rather good” but warned the company was not immune to macroeconomic problems.

“Currently, consumer confidence and spending are holding up relatively well, and we think that bodes well for the next quarter. However, as we move forward into 2023 and beyond, the demand picture may soften,” Saunders said.

“Nike is in a better position than most brands, but it may be harder to pull off such strong numbers as it enters the end of its fiscal year.”

In after-hours trading, shares fell 10.1% to $85.68.

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