Nike (NKE) shares fell more than 2% in early trading on Friday after reporting earnings that missed estimates as its margins were squeezed by higher costs and cuts from a decline in consumer spending.
Key things
- Nike shares fell more than 2% in early trading Friday after reporting earnings that beat estimates.
- Nike reported net income of $5.07 billion, down 16% from a year ago, and earnings per share of $3.27, down 15% from a year ago. Both missed analysts’ estimates.
- Higher costs and margins squeezed Nike’s margins as consumers pulled back from discretionary spending.
The sportswear retailer reported net income of $5.07 billion, down 16% from a year ago. earnings per share (EPS) at $3.27, down 15% from a year earlier. Both missed analysts’ estimates.
The company said that his gross margin fell 140 basis points to 43.6% due to “higher product input costs and increased transportation and logistics costs, higher margins and continued unfavorable changes in net foreign currency exchange rates.
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Some bright spots for Nike included sales growth in the Greater China region as COVID-19 lockdowns eased, with sales there reaching $1.8 billion for the quarter, up 16% year-over-year (year-over-year). Nike’s global soccer business also grew 25% year-over-year, while sales from Jordan’s apparel and sneaker lines hit $6.5 billion, up 29% year-over-year.
Nike President and CEO John Donahoe said he expects the company’s partnership with popular athletes such as Erling Haaland and LeBron James could provide a “huge opportunity” for the company.
Nike shares fell more than 4% year-to-date after Friday’s decline.