On Tuesday, Nike, the multinational company that produces apparel and sports equipment published its financial results for the third quarter of the 2023 fiscal year. The results revealed that Nike based in Oregon generated a revenue of $12.39 billion, representing a 14 percent growth in revenue compared to the third quarter of the 2022 fiscal year. In the same three-month period last year, the company recorded a revenue of $10.87 billion.
The multinational company experienced a decline in its net income from $1.4 billion to $1.24 billion in the past year. Its diluted earnings per common share also decreased by 9% to $0.79. However, the company’s net income still surpassed the projections and expectations of market analysts and experts, despite the drop in figures.
In the latest financial quarter, Nike’s inventory increased by double digits, rising from $7.7 billion in the same quarter the previous year to $8.9 billion. Despite this increase, Matthew Friend, the Chief Financial Officer of Nike, stated that the company has been making great strides in managing its inventory levels in order to achieve sustainable and profitable growth.
However, the increase in inventory levels has negatively impacted Nike’s gross margin, which decreased by 330 basis points in the current quarter. This decline was caused by several factors, including higher markdowns used to liquidate excess inventory, unfavorable changes in net foreign currency exchange rates, increased product input costs, and elevated freight and logistics costs. Despite these challenges, Nike’s revenue and net income exceeded the expectations of market analysts and experts.
Strong holiday sales and continued sales momentum in the new year helped company post a quarterly revenue increase for North America at 27 percent. It is important to note that the increased sales and revenue comes at a time when countries were undergoing severe economic pressure from increasing inflation and increased interest rates by central banks.
The regions of Europe, the Middle East, Africa, the Asia Pacific, and Latin America experienced growth.
Nike’s revenue in the Greater China region saw a 1% growth in the third quarter, driven by a 3% increase in Nike direct sales and a decline of 11% in digital sales. As the country reopened, more consumers started visiting physical stores, leading to this trend.
Despite headwinds from store closures in December, results improved as traffic rebounded when the country reopened in January. The positive momentum continued through the Chinese New Year and into February.