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Nike’s profits fall on lower sales in North America and China – AFR

Lower sales in North America and China weighed on Nike’s quarterly results as the sports giant on Monday forecast modest sales growth amid a strong dollar, rising inflation and other headwinds.

The Oregon-based company — which at times saw strong prices during the pandemic but also faced Covid-19 factory shutdowns in Asia that reduced its inventories — reported lower earnings for its fourth quarter.

For the quarter ended May 31, Nike reported earnings of $1.4 billion, down five percent from a year earlier, on a one percent decline in sales to 12.2 percent.

Neil Saunders, chief executive of GlobalData, a retail consultancy, said the results were “pretty good” but with some unfortunate “devils in the details”.

These include the difficult inflationary environment in North America, which has caused some consumers to limit their discretionary investments.

Another problem is China, where lockdowns “create sudden swings in consumer behavior,” Saunders said in a note.

“In theory there should be a rebound when China reopens, but this could be quickly reversed if more lockdowns are imposed.”

Shares fell as Nike forecast flat to “slightly increasing” sales for the coming quarter.

Matthew Friend, Nike’s chief financial officer, said the company is monitoring consumer behavior for “impact of high inflation” and is taking a “cautious approach” to Greater China amid the country’s restrictive Covid-19 policies.

Friend also said the forecast reflects a drag from the strong dollar in overseas markets, as well as the continued drag from high freight costs and supply chain investment.

Shares fell 3.0 percent in after-hours trading to $107.20.

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