Nike Inc. surpassed earnings estimates handily on Tuesday as North American consumers hurried to stock up on sneakers and clothing before the holidays. This was the company's highest quarterly revenue rise in more than ten years, save one quarter.
In after-hours trading, shares of the biggest sportswear manufacturer in the world rose 13%.
The Beaverton, Oregon-based company grew sales and drew in recession-averse customers by offering steeper discounts and more promotions throughout the quarter to remove surplus inventory. The pandemic-driven sales boom in sporting apparel was also maintained by wealthier consumers.
On a call following the release of the business's earnings, Nike's finance director Matthew Friend stated that the company had made strong progress in clearing inventory during the quarter and that merchandise for the spring season was arriving earlier and with faster delivery times.
He noted that the firm experienced record demand on Black Friday and Cyber Monday in North America, while Nike experienced its biggest Cyber Week in the regions of Europe, the Middle East, and Africa, with demand rising by 75% from the previous year.
According to Refinitiv statistics, Nike reported a profit of 85 cents per share for the second quarter that ended in November, exceeding the consensus forecast of 64 cents.
Revenue increased 17% to $13.32 billion, exceeding the $12.57 billion average projection. With the exception of a 95% increase in the fourth quarter of 2021, when retail stores had just begun to open after a year of pandemic lockdowns, that was its highest performance in 42 quarters.
Nike's biggest market, North America, saw a 30% increase in sales, while its most lucrative market, China, saw a 3% decline as a result of COVID-related limitations in the nation.
Since the Chinese government loosened restrictions, according to Swartz, the business climate in China has begun to improve.
However, a stronger currency, increased freight and logistics expenses, as well as larger markdowns to clear inventory, put pressure on Nike's profits throughout the quarter. To reach 42.9%, gross margins dropped by 300 basis points.
The business stated that compared to its earlier prediction of a low double-digit increase, it now anticipated revenue growth for the current year ending May 2023 to improve somewhat to low teens on a currency-neutral basis. It didn't give specifics.
