A customer enters a Nike store along the Magnificent Mile shopping district on December 21, 2022 in Chicago, Illinois.
Scott Olson | Getty Images
Nike reported mixed fiscal fourth-quarter earnings on Thursday, as lower margins weighed on profits.
Here’s how the sneaker giant performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: 66 cents vs. 67 cents expected
- Revenue: $12.83 billion vs. $12.59 billion expected
The company’s reported net income for the three-month period that ended May 31 was $1.03 billion, or 66 cents per share, compared with $1.44 billion, or 90 cents a share, a year earlier.
Sales rose to $12.83 billion, up about 5% from $12.23 billion a year earlier.
Investors have been eager to see if Nike managed to improve its bloated inventory levels, which have weighed on its margins.
Nike’s margins fell again this quarter, this time by 1.4 percentage points to 43.6%. The company attributed the drop to higher product input costs, elevated freight and logistics costs, an uptick in promotions and unfavorable currency exchange rates.
Other retailers that reported earnings recently noted freight and logistics costs had gone done for them and proved to be a boon for their margins.
Inventories came in at $8.5 billion, flat compared with the prior-year period.
In March, executives said on a call with analysts they were “increasingly confident” the company would be able to exit the fiscal year with healthy inventory levels. They noted sales momentum could lead to “even leaner inventory” than anticipated.
Nike has been relying on its wholesale partners to reduce inventory levels. The push boosted its wholesale revenue over the past few quarters, but didn’t help its margins much.
The company said in March that it expects revenue from that segment to moderate moving forward. Still, Nike recently restored some of the wholesale relationships that it cut when it first began focusing on its direct-to-consumer strategy in 2020.
Both DSW and Macy’s will start selling a range of Nike merchandise again in October, the retailers both announced in June.
Macy’s hasn’t received a shipment from Nike since December 2021, but will now resume selling its apparel, including plus size women’s, big and tall men’s, kid’s, bags and other gear, the department store told analysts during an earnings call. Nike’s more premium offerings appear to be off the table for sale at Macy’s.
The decision to bring Macy’s and DSW back under the Nike fold has left some investors wondering if the company is moving away from its direct-to-consumer strategy.
Investors have also been curious to see how sales have rebounded in China following Covid lockdowns. During Nike’s holiday quarter, China sales came in below estimates. The country overall has since seen an uneven path of economic recovery.
In April, retail sales in China rose 18.4% but came in lower than economists’ forecast of 21%.
