Nike Inc Q1 Profits Slide on Increased Costs
For the quarter (Q1) ending 31 August, Nike booked an 8% jump in Nike Direct sales on a reported basis and a 14% jump on a currency-neutral basis.
Nike Brand Digital sales rose 16% on a reported basis and 23% on a currency-neutral basis.
But gross margin fell 220 basis points to 44.3%, primarily driven by elevated freight and logistics costs, lower margins in the Nike Direct business driven by higher markdowns, and unfavourable changes in net foreign currency exchange rates, including hedges, partially offset by strategic pricing actions. The overall decrease in margins was primarily driven by North America, which took measures to liquidate excess inventory through Nike Direct markdowns and wholesale marketplace actions.
China was the only market to post a decline with revenues down by around 16% overall and down by 13% on a constant currency basis.
The impact of Covid restrictions has eased but continues to have a negative impact on overall demand, with GlobalData managing director, Neil Saunders warning Nike needs to be “less reliant on China as an engine of growth”.
Earlier this month, the board of directors at Nike Inc, voted against a shareholder proposal to halt its sourcing of goods and raw materials from China as concerns surrounding human rights violations in Xinjiang continued to mount.
Source: JUST STYLE
https://www.just-style.com/news/nike-inc-q1-profits-slide-on-increased-costs/