Nike Inc.’s sales grew in the latest period as the sneaker giant benefited from gains in its digital business while navigating supply-chain snarls and getting factories in Asia where its goods are made back to full production.
The company posted revenue of $10.9 billion in the quarter ended Feb. 28, up 5% from the same period a year earlier. Analysts expected revenue of $10.6 billion. Profit in Nike’s fiscal third quarter was roughly flat at $1.4 billion, or 87 cents a share, compared with a year earlier.
Shares in Nike rose 6% in after-hours trading. The company’s stock is down almost 22% this year through Monday’s close, compared with a roughly 6% decline in the S&P 500.
“This success amidst a dynamic macroeconomic environment is what continues to give us confidence in our long-term outlook and it’s why I would not trade our position with anyone,” said Chief Executive John Donahoe during Monday’s earnings call.
Nike said Monday that consumer demand continues to outpace supplies of products. Nike finance chief Matthew Friend told analysts that supplies of goods were beginning to improve but transit times remained elevated. Transit times for North America worsened in the third quarter and transit was now taking more than six weeks longer than pre-pandemic levels, he said.
Nike said higher freight and logistics costs continued to weigh on its profit. This past week freight rates from China to Los Angeles remained near record levels and have tripled compared with the same period a year ago. The company said its inventories were up 15% due to extended lead times.
Mr. Friend said factories making the company’s goods in Vietnam were operational and that footwear and apparel production had returned to volumes before pandemic-related closures late in 2021.
However, persistent inflation and the Russia-Ukraine crisis pose challenges to sales in coming quarters. The company earlier this month announced it would close its stores in Russia, citing increasing challenges of managing its business after the Ukraine invasion. It has about 116 locations in Russia, and the company said it would still pay its employees in the region.
Mr. Friend said the operation of stores and e-commerce has paused in both countries and that the company’s combined business in Russia and Ukraine accounts for less than 1% of total revenue
Nike recorded year-over-year increases in sales in North America as well as two other divisions—Europe, Middle East and Africa; and Asia Pacific & Latin America. In Greater China, overall sales fell 5% to $2.16 billion.
Nike has been investing heavily in efforts to sell products to consumers through its own retail channels, while also reducing its inventory with certain partners such as
Foot Locker Inc.
In recent years, Nike has cut around half of its wholesale accounts in North America while focusing on sales through its own apps, websites and stores.
Write to Inti Pacheco at [email protected]
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Appeared in the March 22, 2022, print edition as ‘Digital Sales Lift Nike Results.’
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