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Nike (NKE) reports fiscal Q3 2022 earnings

Nike on Monday reported earnings and gross sales for the fiscal third quarter that topped analysts’ estimates, because of sturdy demand in North America as customers headed again to shops.

The higher-than-expected outcomes proved Nike’s means to function in a risky atmosphere, CEO John Donahoe mentioned in a press launch. “Market demand continues to considerably exceed accessible stock provide,” he added.

Given its international attain, Nike is serving as considerably of a bellwether of how different retailers are managing challenges equivalent to elevated oil costs, inflation, crippled provide chains and international unrest pushed by Russia’s invasion of Ukraine.

Nike’s China enterprise can be on watch. A boycott amongst Chinese language customers towards Western manufacturers precipitated Nike’s gross sales to take successful early final yr, and it is nonetheless in restoration mode. Nike has prioritized North America, its greatest market, over China throughout the pandemic when provides have been tight. Nike mentioned gross sales in North America climbed 9%. Gross sales in Better China, the corporate’s third-biggest market behind its Europe, Center East and Africa section, fell 5% from the prior yr.

On Monday, buyers noticed brilliant spots despite uncertainty, sending Nike shares up greater than 6% in after-hours buying and selling.

This is how Nike did in its fiscal third quarter in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by Refinitiv:

  • Earnings per share: 87 cents vs. 71 cents anticipated
  • Income: $10.87 billion vs. $10.59 billion anticipated

Nike reported internet revenue for the three-month interval ended Feb. 28 of $1.4 billion, or 87 cents per share, in contrast with $1.45 billion, or 90 cents a share, a yr earlier. That topped revenue estimates for 71 cents a share, in line with Refinitiv knowledge.

Gross sales rose 5% to $10.87 billion from $10.36 billion a yr earlier, beating analysts’ expectations for $10.59 billion.

Chief Monetary Officer Matthew Good friend instructed analysts on a post-earnings name that Nike’s income development would have been even stronger over the vacation interval had Nike had sufficient merchandise available to satisfy shopper demand. All of its factories in Vietnam are actually operational, he mentioned, following pandemic-driven shutdowns that stalled manufacturing.

Transportation instances, nevertheless, stay elevated, significantly in North America. Good friend mentioned that Nike has moved up its shopping for timelines as a way to have sufficient merchandise on cabinets for later this fall.

As of Feb. 28, Nike mentioned inventories on its steadiness sheet totaled $7.7 billion, up 15% from the prior-year interval, partially because of ongoing provide chain disruptions which have elongated transit instances, the corporate mentioned. The bloated stock ranges had been partially offset by sturdy client demand, it mentioned.

Nike’s gross margins elevated barely to 46.6% from 45.6% the prior yr, because of extra full-price promoting.

Nike has more and more shifted its enterprise away from wholesalers and as an alternative to promoting extra items on to customers. Foot Locker, for instance, lately mentioned it could lose a share of Nike merchandise within the coming years. In flip, Nike has been investing closely in its web site and flagship shops to win gross sales.

Wholesale income within the third quarter fell 1%, whereas Nike’s retailer gross sales rose 14% yr over yr, as shopper site visitors “normalized,” the corporate mentioned.

Good friend mentioned Monday that, at this level, Nike has completed speaking the “massive account pivots” to all of its wholesale companions.

Nike’s digital gross sales within the newest quarter rose 19% from the prior yr, fueled by 33% development in North America. Donahoe instructed analysts on the earnings name that Nike will proceed to develop its presence within the so-called digital metaverse, via its tie-up with Roblox in addition to its acquisition of the digital sneaker marker RTFKT.

As of Monday’s market shut, Nike shares are down 22% this yr.

Discover the complete earnings press launch from Nike right here.

This story is growing. Please test again for updates.

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