Nike reported better-than-expected earnings in its last quarter on March 21, supported by strong demand, although higher inventory and logistics costs weighed on its margins.
In the three months ended February, the company announced a profit of $ 11 billion, down 1,2 percent compared to the previous year, while revenues increased by 14 percent to $ 12,4 billion.
The company said its revenues in Greater China fell 8 percent even as the Oregon-based company posted a strong performance in North America, despite Beijing easing coronavirus restrictions.
Especially Nike's shoe sales increased by 20 percent compared to the previous year, while clothing sales increased by 5 percent.
Nike said in a statement that factors pushing its margins include adverse changes in exchange rates, "higher product input costs, and increased freight and logistics costs."
However, Chief Financial Officer Matthew Friend added: “We've made tremendous progress in inventory as we position Nike for sustainable and more profitable growth.”
Third Bridge research firm analyst Shoggi Ezeizat said the sneaker industry "continues to move forward strongly into the first half of 2023 despite tight consumer spending."
He added that the company has been successful in reducing high inventory levels through effective promotional efforts compared to its competitors.
After supply chain problems in 2021, retailers accelerated deliveries in 2022 but struggled to align product supply with demand. An excessive amount of goods forced retailers to liquidate goods at low prices.
“Experts, however, are cautious about the long-term growth prospects of Nike and Western brands in China due to increased competition with other local Chinese brands,” Ezeizat said.