Nike Beats Expectations With North America Driving Revenue Growth — Retail Bum

Sportswear giant Nike saw its shares surge 13% in after-hours trading after the company reported its best quarterly revenue growth in more than a decade, with shoppers in North America rushing to buy sneakers and apparel before the holidays.

The company also benefited from increased promotion activity, which helped it reduce excess inventory and attract budget-conscious shoppers. Meanwhile, wealthy shoppers drove sales of its athletic apparel products.

Nike saw its quarterly revenue increase by 17% to $13.32 billion, exceeding market estimates of $12.7 billion.

Sales in the U.S. and Canada went up by 30%. Meanwhile, in China, the company’s most profitable market, sales fell by 3% due to Covid-related lockdowns and other restrictions.

“The Greater China business is still hammered but showing signs of coming back recently in the last few weeks since the Chinese government has relaxed the zero COVID policy, which is a big positive for Nike,” Morningstar analyst David Swartz noted.

That said, the company saw its gross margins shrink 300 basis points to nearly 43%, while quarterly net income remained flat on a year-over-year basis due to a strong dollar and increased freight and logistics costs, Reuters reported.

Looking ahead, the company expects its revenue to continue growing for the fiscal year ending May 2023 in the low teens.

Originally published at https://retailbum.com on December 21, 2022.