Nike reported flat profits on higher sales Tuesday in results that topped estimates and lifted shares as strong demand helped counter the drag from heavy discounting due to excessive inventory.
Profits for the quarter ending at November 30 came in at $1.3 billion, the same as in the year-ago period while revenues jumped 17 percent to $13.3 billion.
“Consumer demand for Nike’s portfolio of brands continues to drive strong business momentum in a dynamic environment,” said Chief Financial Officer Matthew Friend. “We remain focused on what we can control.”
In the wake of supply chain problems in 2021, retailers ramped up deliveries in 2022 but have struggled to align product supply with demand. Excessive quantities of merchandise has forced retailers to liquidate goods at low prices.
In the most recent quarter, Nike’s gross margin declined compared with the prior quarter due to higher markdowns, especially in North America, Nike said.
Profit margins were also pressured by higher freight and logistics costs, as well as increased marketing expenses.
But those dynamics were countered by solid demand across most markets, including North America, where sales surged 30 percent from the year-ago period.
In China, where Nike’s results have been dented by repeat Covid-19 restrictions, sales slipped three percent. However, that was better than the 16 percent tumble in the prior quarter.
Shares jumped 6.9 percent to $110.30 in after-hours trading.
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