In the first quarter of fiscal 2024, Nike missed on revenue for the first time in two years, posting sales of $12.94 billion, which fell short of analyst forecasts of $12.98 billion. The company blamed its main market, North America, for its failure due to weaker-than-expected sales.
Despite the revenue miss, Nike beat on earnings per share, reporting EPS of 94 cents, which was above analyst expectations of 75 cents. The company said that the earnings beat was due to better-than-expected gross margins and lower operating expenses.
The largest sportswear manufacturer in the world also anticipated a 100 basis point rise in second-quarter gross margins, reversing a six-quarter drop, thanks to fewer planned markdowns and cheaper freight costs.
Read Also:
Kneron raises $49 million to compete with Nvidia as an AI chip company
JP Morgan Chase UK to ban cryptocurrency purchases over fraud fears
Ford & UAW Labor Contract Talks not done
Things To Know About US -South Korea Chips Trade Issue
How Russia’s ban on diesel exports could affect global Economy
Citi Group may cut jobs any time soon in UK
HSBC-backed Silent Eight is using AI to help banks Combat financial crime
According to Reuters, Some investors have raised concerns that Nike’s Jordan brand – a key profit-maker for the company – is “losing steam” as the value of some shoes fall on resale platforms such as StockX.
“We’re closely monitoring the operating environment, including foreign currency exchange rates, consumer demand over the holiday season, and our second half wholesale order book,” said finance chief Matthew Friend on a call with analysts.
“We are cautiously planning for modest markdown improvements for the balance of the year, given the promotional environment,” he added.
Nike is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area, and as of 2023, it is the world’s largest supplier of athletic shoes and apparel and a major manufacturer of sports equipment.
Bill Bowerman, a track and field coach at the University of Oregon, and Phil Knight, a former student, established Nike in 1964 as Blue Ribbon Sports. The business started out by selling Japanese-imported shoes, but in the early 1970s it started making its own shoes. Thanks to its cutting-edge products and its distinctive branding, Nike rose to prominence among customers and athletes alike.
North America is Nike’s largest market, and sales in the region were down 2% in the first quarter of fiscal 2024. This was likely due to a number of factors, including inflation, supply chain disruptions, and competition from other brands.
Investors have been keenly monitoring Nike’s resurgence in China, its interactions with wholesale partners, and any possible sales effects of the resumed student loan payments. In addition, they are eager to see Nike’s margins improve following recent supply chain problems, bloated inventory, and excessive promotions.