Lower sales in North America and China dented Nike’s quarterly results as the sports giant on Monday projected modest revenue growth amid the strong dollar, rising inflation and other headwinds.
The Oregon company, which has enjoyed strong pricing at times during the pandemic but also faced Covid-19 factory lockdowns in Asia that have crimped its inventories, reported lower profits for its fiscal fourth quarter.
For the quarter ending May 31, Nike reported profits of $1.4 billion, down five per cent from the prior year on a one per cent dip in revenues to $12.2 per cent.
Neil Saunders, managing director of GlobalData, a retail consultancy, said the results were “reasonably good” but with some unfortunate “devils in details.”
These include the tough North American inflationary environment, which has led some consumers to cut back on discretionary investments.
Another issue is China where lockdowns “are creating sudden swings in consumer behaviour,” Saunders said in a note.
“In theory, there should be a recover as China reopens, but this could quickly be reversed if further lockdowns are imposed.”
Shares retreated as Nike forecasted revenues of flat to “slightly up” in the coming quarter.
Nike Chief Financial Officer Matthew Friend said the company was monitoring consumer behaviour over “implications of high inflation” and adopting a “cautious approach” to Greater China given the country’s restrictive Covid-19 policies.
Friend also said the forecast reflects a drag from the strong dollar in overseas markets, as well as the continued hit from lofty freight costs and supply chain investments.
Shares dropped 3.0 per cent to $107.20 in after-hours trading.