Nike (NKE) earnings Q1 2023
A woman shops for shoes at the Nike Factory Store at the Outlet Shoppes at El Paso, in El Paso, Texas on November 26, 2021.
Paul Ratje | AFP | Getty Images
Nike said on Thursday it had a strong first fiscal quarter despite supply chain problems as well as falling sales in Greater China, its third-biggest market by revenue.
But the company̵[ads1]7;s shares fell more than 10% in after-hours trading.
Like other retailers, Nike has faced headwinds in its supply chain, such as an increase in both shipping costs and shipping times in recent quarters. The company said inventory levels increased during the quarter compared to the same period last year.
Here’s how Nike did in its first fiscal quarter compared to what Wall Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: 93 cents against the expected 92 cents
- Revenue: $12.69 billion vs. $12.27 billion expected
Nike reported net income for the three-month period ended Aug. 31 fell 22% to $1.5 billion, or 93 cents a share, compared with $1.87 billion, or $1.18 a share, a year earlier.
Revenue in the period increased 4% to $12.7 billion, compared to $12.2 billion a year earlier.
Recently, Nike has changed its strategy and is looking to sell sneakers and other merchandise directly to customers and scale back on what is sold by wholesale partners such as Foot Locker. The company said Thursday that its direct sales grew 8% to $5.1 billion, and sales for its digital brand rose 16%. On the flip side, sales for Nike’s wholesale business were up 1%.
In its fiscal first quarter, Nike said inventory rose 44% to $9.7 billion on balance 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 about $1.7 billion, compared with nearly $2 billion a year earlier. The company has faced disruptions in business in the region, where Covid shutdowns have affected business. Nike had said last quarter that it expected problems in Greater China to weigh on the business.
Meanwhile, total sales in North America, Nike’s biggest market, rose 13% to $5.5 billion in the fiscal first quarter, compared with about $4.9 billion in the same period last year. The sneaker giant has continually said that consumer demand, particularly in the US market, has not slowed despite inflation.
Read the company’s earnings report here.
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