Market Updates
Nike Quarterly Sales Rise 4%, Net Income Plunges 22%
Scott Peters
29 Sep, 2022
New York City
Nike Inc dropped more than 10% in the after-market trading after the maker of premium athletic shoemaker reported a sharp fall in earnings.
In the latest quarter ending in August, Nike said sales increased 4% to $12.7 billion from $12.2 billion a year ago.
Despite the weakness in its third largest market in China and supply chain challenges, sales rose.
Net income in the fiscal year first quarter plunged 22% to $1.5 billion from $1.87 billion a year ago.
Diluted earnings per share declined to 93 cents from $1.16 a year ago.
Gross Margin Declined
The decline in gross margin was primarily driven by the weakness in the North America segment.
Gross margin decreased 220 basis points to 44.3%, primarily driven by higher freight and logistics costs, lower margins in NIKE Direct business driven by higher markdowns, and higher dollar.
Inventories Jump 44%
Inventories surged 44% $9.7 billion, primarily driven by larger in-transit shipments to deal with supply chain issues and volatility.
Segment Breakdown
Sales in North America, its largest market, increased 13% to $5.5 billion from $4.9 billion a year ago.
Sales in Europe, Middle East and Africa increased 1% to $3.33 billion from $3.30 billion a year ago.
Greater China sales declined 16% to $1.7 billion, largely on the business interruptions linked to zero-Covid policy lockdowns.
Stock Buyback and Dividend
The company repurchased and retired 9 million shares for $1.0 billion in the quarter.
Nike used $0.7 billion to repurchase 6.5 million shares retired under the company
Annual Returns
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Earnings
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