Updated: Jul 19
Nike's quarterly sales were negatively impacted by lower sales in North America and China, and the sports giant on Monday forecast modest revenue growth in the face of the strong currency, rising inflation, and other challenges.
The Oregon company reported lower profitability for its fiscal fourth quarter despite seeing periods of excellent pricing during the epidemic as well as Covid-19 manufacturing lockdowns in Asia that have reduced its inventory.
Nike reported $1.4 billion in profits for the three months ending May 31, a 5% decline from the same period last year, on the back of a 1% decline in sales to $12.2%.
The retail consulting company's managing director, Neil Saunders, said the results were "pretty good" but had some regrettable "devils in details."
Some consumers have reduced their discretionary investments as a result of the challenging North American inflationary environment.
Another problem is China, where lockdowns, according to a letter from Saunders, "are causing dramatic swings in customer behavior."
Theoretically, recovery should occur once China reopens, but if additional lockdowns are implemented, this may happen very fast.
Nike predicted flat to "slightly increased" revenues for the upcoming quarter, which caused shares to fall.
Nike's chief financial officer, Matthew Friend, stated that the business was keeping an eye on consumer behavior because of the "implications of high inflation" and was taking a "conservative approach" to Greater China because of its onerous Covid-19 regulations.
The prediction, according to Friend, also takes into account the drag caused by the strong dollar in international markets as well as the ongoing negative effects of high freight costs and supply chain investments.
After-hours trading saw a 3.0 percent decline in shares to $107.20.