Nike Earnings Beat on Vigorous North American Sales

Nike reported stronger than expected Q2 2022 results after the close Monday. Nike’s consumer demand in $NKE’s biggest market North America, was vigorous. Business in China remains pivotal with varying backlash in China amid global tensions saw sales down 20%. Nike’s strong digital revenue growth continued.

Nike Women Athlete

Nike Inc NYSE: NKE Reported Earnings After Close Monday

83 cents vs $0.63 EPS and $11.36 billion $11.25 Billion forecast in revenue. 

Earnings Preview

  • Q2 2022 results after the close; conference call at 5 p.m. ET
  • Earnings per share: 83 cents vs. Projected EPS: 63 cents
  • Revenue $11.36 billion vs Projected sales: $11.25 billion
  • Net income rose to $1.34 billion, from $1.25 billion, or 78 cents per share, a year earlier.

CEO John Donahoe said the retailer is in a “much stronger competitive position” than it was pre-pandemic.

Highlights

  • Sales in North America, Nike’s biggest market, climbed 12%, representing the highest growth of all geographies.
  • Sales in Greater China fell 20%
  • Sales in Europe, Middle East and Africa region grew 6%.

China Update

Nike’s recovery in China has become a bigger focus for investors of late as the market given it’s pivotal place for the company’s future growth. Western brands have faced backlash in China amid global tensions with both tennis and basketball in particular.

Nike said fewer items were sold in China during the latest quarter due, in part, to lost production from the Vietnam factory closures and lower available inventory. Ongoing Covid-related lockdowns in China also made traffic patterns more volatile, he said.

Fiscal 2022 will be a year of recovery for China, Friend said. But he said he expects to see sequential improvements in the region beginning in the third quarter.

Chief Financial Officer Matt Friend told analysts all factories in Vietnam are up and running, and production is back to about 80% of pre-closure levels. Friend added that Nike is increasingly confident that supply levels globally will normalize heading into fiscal 2023.

Digital and Direct Sales Growth

Nike its digital sales rose 12% year over year, while sales through Nike Direct were up 9%. Nike has increasingly pulled its goods out of wholesale channels, such as discount stores, and is selling more workout gear through its own website and stores.

Nike in the Metaverse

Nike announced it bought virtual sneaker company RTFKT for an undisclosed amount, making a bet on the metaverse. Formed in 2020 by Benoit Pagotto, Chris Le and Steven Vasilev, RTFKT also makes NFT collectibles and memes.

“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” Nike Chief Executive Officer John Donahoe said in a statement at the time.

Nike had been filing trademarks indicating its intent to make and sell virtual Nike-branded shoes and apparel.

“We’ll invest … to deliver next-generation experiences that involved RTFKT and Nike brands,” said Donahoe on an earnings call.

Outlook

For the third quarter, Nike expects sales to grow a low-single-digit rate from the prior year, due to lingering effects from the Vietnam factory closures. Analysts had been forecasting a 2.5% rise

Nike shares had close

 


What to Watch for in Nike Earnings

Highlights

  • Sales in North America
  • Sales in China
  • Sales at the Converse brand
  • Sales for the Nike brand, footwear sales, apparel and equipment revenue
  • Digital sales
  • Expenses for shipping and returns
  • Nike’s margins
  • Inventories

About Nike

Nike is based in Beaverton, Oregon. NIKE, Inc. includes the Nike, Converse, and Jordan brands. Nike, Inc. is involved in the design, development, manufacturing and worldwide marketing and sales of apparel, footwear, accessories, equipment and services. Nike is the world’s largest supplier of athletic shoes and apparel and a major manufacturer of sports equipment

Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognized trademarks of “Just Do It” and the Swoosh logo (which represents the wing of the Greek goddess Nike).

Source: Nike

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