Nike Earnings Miss, But Revenue Breaks Record

Nike missed a quarterly earnings estimate for the first time since 2020 but saw yearly revenue increase above $50 billion for the first time.

Nike‘s quarterly earnings, released Thursday, were a mixed bag, with revenue exceeding expectations but earnings falling below for the first time in three years.

Reported net income for the quarter that ended May 31 was $1.03 billion — 66 cents per share, falling shy of the expected 67 cents per share. The net income year over year (YoY) was down from 90 cents per share; perhaps why Nike is bringing back the Kobe brand later this year. For the full fiscal year, revenue exceeded $50 billion for the first time in company history at $51.2 billion, up 10% YoY and higher than the $50.99 billion expectation.

“Nike’s strong results make clear that our strategy is working,” John Donahoe, Nike’s president and CEO, said. “FY23 was a milestone year for NIKE as our unique advantages continue to drive competitive separation. Our investment in innovation and our digital leadership are fueling broad-based growth across our portfolio of brands, as we create value by serving the future of sport.”

Global sales were up 5% in the quarter YoY largely led by China rolling back pandemic restrictions. While total sales in North America, Europe, the Middle East, Africa, Asia Pacific, and Latin America rose slightly by single digits, Greater China sales increased by 16%. In North America, equipment sales jumped 24%, footwear sales rose 6%, and apparel sales declined by 2%.

In Thursday’s earnings call, Nike Vice President of investor relations and strategic finance Paul Trussell specifically touted the growth of Jordan Brand, which he said was in the mid-30 percent range year over year and on its way to becoming the second-largest shoe brand in North America behind Nike itself. He mentioned its partnerships across pop culture like its collaboration in the new Spider-Man movie to the women’s Teyana Taylor AJ1 High to its four basketball franchise shoes led by the game shoe, Jayson Tatum, Luka Dončić, and Zion Williamson.

Forget hockey sticks, @Nike's Jordan Brand revenue is growing like a… swoosh.

Fun look at @Jumpman23's growth by @Sportico/@LevAkabas pic.twitter.com/zBKgGDu13b
— Eben Novy-Williams (@novy_williams) June 30, 2023

But tighter spending around the world is muting expectations at the Swoosh. Gross margins are expected to rise between 1.4 and 1.6% for fiscal year 2024, and down for the coming quarter. Still, Nike retains an optimistic tone given the overall economic circumstances despite Thursday’s rare setback that left its stock slightly down at the start of Friday trading.

“When we step back and look at the actions that we took last year, we’re very happy with where we finished the year and in fact, our inventory levels are ahead of our plan and ahead of the competition,” Matthew Friend, Nike CFO, said.