Lower NAmerica, China sales drag Nike profits

NEW YORK CITY: Lower sales in North America and China dented Nike's quarterly results as the sports giant on Monday (Tuesday in Manila) projected modest revenue growth amid the strong dollar, rising inflation and other headwinds.

The Oregon-based company — which has enjoyed strong pricing at times during the coronavirus pandemic, but also faced Covid-19 factory lockdowns in Asia that have crimped its inventories — reported a reduced profit for its fiscal fourth quarter.

For the quarter ending May 31, profit reached $1.4 billion, down 5 percent from a year earlier on a 1-percent dip in revenues to $12.2 billion.

Neil Saunders, managing director of retail consultancy firm GlobalData, said the results were "reasonably good," but with some unfortunate "devils in details."

These include the tough North American inflationary environment, which has led some consumers to cut back on discretionary investments.

Another issue is China, where lockdowns "are creating sudden swings in consumer behavior," Saunders said in a note.

"In theory, there should be [recovery] as China reopens, but this could quickly be reversed if further lockdowns are imposed," he warned.

Shares retreated as Nike forecast revenues of flat to "slightly up" in the coming quarter.

Nike Chief Financial Officer Matthew Friend said the company was monitoring consumer behavior over "implications of high inflation" and adopting a "cautious approach" to China, given the country's restrictive Covid-19 approach.

He also said the forecast reflected a drag from the strong dollar in overseas markets, as well as the continued hit from lofty freight costs and supply chain investments.

Source: TheManila Times