Pedestrians walk past the American multinational sportswear brand Nike Store and its logo seen in Hong Kong.
Budrul Chukrut | LightRakete | Getty Images
Nike shares fell in expanded trading Thursday after the sneaker giant reported quarterly sales that fell short of analysts’ expectations due to falling demand in North America.
The share recently lost less than 1%.
Here’s how Nike performed against Wall Street expectations in the first quarter of fiscal year, based on an analyst survey by Refinitiv:
- Earnings per share: $ 1.16 versus an expected $ 1.11
- Revenue: $ 12.25 billion versus an expected $ 12.46 billion
Net income for the three-month period ended August 31 rose to $ 1.87 billion, or $ 1.16 per share, compared to $ 1.52 billion, or 95 cents per share, last year. That beat analysts’ expectations of $ 1.11 per share.
Revenue increased from $ 10.59 billion a year ago to $ 12.25 billion. That fell short of expectations of $ 12.46 billion.
Sales in Greater China rose 11%, the smallest increase in any of its regions. The region had been one of Nike’s biggest sales drivers in the past few quarters.
Sales in North America grew 15% to $ 4.88 billion. That was less than the $ 5.05 billion that the analysts surveyed by FactSet were looking for.
Nike brand digital sales increased 29% year over year. The retailer has invested in its website and a range of mobile apps. This was especially beneficial during the health crisis when many people chose to shop from home.
However, Nike faced other challenges that could affect its future performance. The company has been going through plant closings in Vietnam since mid-July, where it produces around 50% of its shoes and 30% of its clothing.
Analysts and investors had expected sales to be temporarily impacted by the decline in production. The facilities are not yet fully operational.
After Nike reported a close fourth quarter in June, Nike expected annual sales to rise in the low double digits to over $ 50 billion. However, according to a refinitive poll, analysts recently lowered their expectations to $ 49.81 billion. Nike did not provide an updated forecast in its press release.
Nike said it had its last quarter with inventories of $ 6.7 billion.
The company said that its shipping inventories, i.e. goods on the way to storage, increased due to extended lead times due to persistent supply chain disruptions.
Nike shares are up about 13% since Thursday’s market closed, but up about 9% from an all-time high hit in early August. The company has a market capitalization of $ 252.6 billion.
The full press release from Nike can be found here.