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 working to get its Asian suppliers back to full production.
The company posted revenue of $10.9 billion for the quarter ended Feb. 28, up 5% from the same period a year earlier. Analysts expected revenue of $10.6 billion. Profit of $1.4 billion, or 87 cents a share, was roughly flat 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,” Chief Executive
said during Monday’s earnings call.
Nike said that consumer demand for its products continues to outpace supply. Finance chief
told analysts that the company’s supply chain was beginning to improve but that transit times remained elevated. Delivery to North America worsened in the latest quarter and transit was now taking more than six weeks longer than before the pandemic, 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, having tripled from a year earlier. The company said its inventories were up 15% because of 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 difficulty 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, where combined the business accounts for less than 1% of Nike’s total revenue.
He also said even as Nike faces higher costs, it has been able to implement price increases and that demand remains strong because consumers find value in the company’s products.
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.
For the latest quarter, 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.
In China, Nike has been investing in rebuilding consumer connections through marketing campaigns, the company said. Nike also plans to create new partnerships with retailers in the country, and executives said they expect results to improve again in the current quarter.
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Appeared in the March 22, 2022, print edition as ‘Digital Sales Lift Nike Results.’