Nike Inc (NYSE:NKE) reported lower quarterly revenue but it was not as bad as Wall Street expected, despite a Covid lockdown in China, an exit from Russia and a tougher US consumer environment.
With management cautious about the outlook in China, guidance from the sportswear manufacturer and retailer for the coming quarter was revenue growth of a low double-digit percentage and for gross profit margin to be between flat and down 50 basis points.
For the past quarter, gains in Europe offset a 19% decline in China, its most profitable market, and a 5% decrease in North America in the Oregon, USA-based group's fiscal fourth quarter.
Total quarterly revenue of US$12.23bn was down 1% year-on-year but ahead of analyst expectations of US$12.07bn, while net income fell 5% to US$1.44bn.
It is the first time since the first quarter of 2020 that the sportwear giant's quarterly revenue has fallen, with blame put on a combination of inventory pileups, lagging sales in China and supply chain disruptions.
The company said challenges like higher transportation costs and longer shipping times still persist, leading to the cautious guidance.
"These are times when strong brands get stronger, and it has never been more clear than it is today," Nike chief executive John Donahue said.
The slowdown in China builds on an 8% drop in the last quarter, with the company saying inventory levels increased 23% over last year due to long supply chain lead times.
Nike is in the midst of a strategic shift, selling more merchandise directly to consumers and reducing its wholesale business with partners like Foot Locker, Inc. (NYSE:FL) and JD Sports Fashion PLC (LSE:JD.).
Shares of Nike closed Monday at US$110.50, down 2.13%, with after-hours trading indicating another fall of close to 3%.
Since Monday's close, Nike shares have slid 34% so far this year, but are up 8% since the start of 2020.