Nike’s gloomy forecast puts spotlight on North America slowdown
Reuters
Nike
In North America, the company’s biggest market, still-high inflation has led to consumers buying essential goods and reducing discretionary spending.
Sales rose 5% in the region in the fourth quarter, the slowest in four quarters as U.S. wholesalers became more prudent in placing newer orders. In Europe, Middle East and Africa sales increased 3%.r revenue below Wall Street expectations on Thursday as cost-conscious consumers in North America cut back on sneaker and sports apparel purchases overshadowing a strong recovery in China.
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Peer Under Armour forecast annual sales and profit below Wall Street estimates in May due to waning demand and higher discounts.
Nike’s gross margin fell 140 basis points to 43.6% in the reported quarter on efforts to clear excess inventory through more promotions and discounts at a time when the industry is being squeezed by higher supply chain, input and labor costs.
“Given the customer is being quite cautious in at least two regions which are quite significant to Nike, gross margins are expected to still be hit as they continue promotions to try getting customer’s attention,” said Jane Hali & Associates senior analyst Jessica Ramirez
Greater China was a bright spot as sales jumped 16% jump following the reversal of the rigid zero-COVID-19 policy. Sales in the region had declined in the first three quarters.
Nike expects first-quarter reported revenue growth to be flat to up low-single digit, compared with analysts’ average expectation of 5.8% rise, according to IBES data from Refinitiv.
The company expects full-year reported revenue to rise mid-single-digits, compared with analysts expectations of a revenue of a 6.3% rise.
The company’s fourth-quarter revenue rose to $12.83 billion and beat estimates of $12.59 billion, while earnings per share of 66 cents missed estimates by 1 cent.
