Nike Inc. reported robust quarterly sales that beat Wall Street’s expectations as the sportswear brand worked down its excess inventory, but profitability missed estimates.
(Bloomberg) — Nike Inc. reported robust quarterly sales that beat Wall Street’s expectations as the sportswear brand worked down its excess inventory, but profitability missed estimates.
Global revenue rose 14% to $12.4 billion in the quarter ended Feb. 28. That was above analysts’ average estimate of $11.5 billion. Gross margin was 43.3%, below the 43.7% estimate.
Chief Executive Officer John Donahoe and his team have made progress in dealing with the merchandise glut that has forced the company to discount merchandise, hurting profit margins. Inventories were up 16% from the year prior after the company reported a 43% jump the previous quarter.
Even so, the company cited “higher markdowns to liquidate inventory” as hurting gross margin, as well as higher costs for its materials and freight.
In the company’s statement, Donahoe attributed the results to the company’s greater focus on e-commerce and selling through its own channels. “Our proven playbook allows us to navigate volatility as we create value and drive long-term growth,” he said.
Nike shares slipped about 2% at 4:44 p.m. in after-market trading, erasing an earlier gain. The stock had been up about 7% this year through Tuesday’s close.
Weakness in China persisted, though Nike’s troubles there may alleviate as the nation’s reopening reaches full swing. Sales rose across all regions except for greater China, where revenue fell almost 8%.
(Updates share trading and adds details on gross margin)
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