The company beat analysts’ estimates for earnings and revenue, but that’s about it profit margins took a hit from markdowns to clear excess inventory. Higher shipping costs a stronger dollar they also hit Nike’s profits.
The athletic giant announced its fiscal first quarter net income $1.5 billion or 93 cents per share. Analysts had expected earnings of 92 cents per share. Revenue came in at $12.7 billion, compared with analysts’ estimates of $12.2 billion.
Gross margins at Nike fell to 44.3% from 46.5% a year ago. Nike executives said the decline was primarily in North America as the company had to liquidate excess inventory through its Nike Direct sales unit. Nike’s inventory hit $9.7 billion, a 44% increase from the prior period due to what executives said were supply chain issues.
Nike’s total sales in Greater China fell 16% to about $1.7 billion, compared to $2 billion a year ago, as sales were affected by the COVID-19 lockdown. Total sales in North America rose 13% to $5.5 billion, compared with $4.9 billion a year ago, as U.S. demand remained resilient despite rising inflation.
Nike shares fell more than 12% in early trading on Friday, leading to losses on the stock market Dow Jones Industrial Average. They have lost almost half of their value so far this year.