Hot picks: Footwear stocks
Nike Inc. reported robust quarterly sales that beat Wall Street’s expectations as the sportswear brand worked down its excess inventory, but profitability missed estimates.
Global revenue rose 14 per cent to US$12.4 billion in the quarter ended Feb. 28. That was above analysts’ average estimate of US$11.5 billion. Gross margin was 43.3 per cent, below the 43.7 per cent estimate.
Chief Executive Officer John Donahoe and his team have made progress in dealing with the merchandise glut that has forced the company to discount merchandise, hurting profit margins. Inventories were up 16 per cent from the year prior after the company reported a 43 per cent jump the previous quarter.
Even so, the company cited “higher markdowns to liquidate inventory” as hurting gross margin, as well as higher costs for its materials and freight.
In the company’s statement, Donahoe attributed the results to the company’s greater focus on e-commerce and selling through its own channels. “Our proven playbook allows us to navigate volatility as we create value and drive long-term growth,” he said.
Nike shares slipped about 2 per cent at 4:44 p.m. in after-market trading, erasing an earlier gain. The stock had been up about 7 per cent this year through Tuesday’s close.
Weakness in China persisted, though Nike’s troubles there may alleviate as the nation’s reopening reaches full swing. Sales rose across all regions except for greater China, where revenue fell almost 8 per cent.