Nike loses steam and grows only 2% in the first quarter

2023-09-29 16:12:33

Not even the king of sport is immune to the slowdown in consumption. Nike has completed the first quarter of its fiscal year (June to August) with an increase in turnover of just 2% and with the profit falling, according to the results made public by the company.

The company had a turnover of 12,939 million dollars in the period, below analysts’ forecasts. Nike significantly increased its investment in marketing, what the company calls “demand creation spending,” which increased by 13%. But sales did not respond at the same pace.

The worst evolution was recorded in North America, its largest market, with a decrease in turnover of 2%, to 5,423 million dollars. Europe, the Middle East and Africa, the second territory by sales volume, recorded growth of 8%, up to $3.61 billion.

Nike increased its marketing investment by 13%, but increased its sales by only 2%

In China, the increase was more moderate, at 5%, weighed down by exchange rates: discounting them, turnover increased by 13%. Finally, in Asia Pacific and Latin America, the group increased its revenues by 2%, weighed down by the evolution of clothing sales.

In total, the Nike brand grew by 3%, while Converse, which contributes only 588 million dollars to quarterly turnover, increased its income by 2%. By product type, the one that performed best was equipment, with an increase of 9%, while clothing sales fell 1% and footwear sales increased 4%.

The company stagnated its sales in the multi-brand channel and increased them by 6% in the direct channel

Sales in the direct sales channel, which has been the spearhead of Nike’s strategy in recent years, increased 6%, while sales in the multi-brand channel remained flat. For its part, Billing in the digital channel increased by 2%.

The increase in costs and the decrease in sales impacted the margin, which contracted by ten basis points, to 44.2%. Net income fell 1% to $1.45 billionabove forecasts, above Wall Street estimates, thanks to the fact that the price increase partially offset the increase in costs.

Nike is led by John Donahoe and is listed on the New York Stock Exchange. The company is based in Beaverton (Oregon) and is the largest sports fashion group in the world by revenue, ahead of Adidas.