Nike Inc enhanced its first-quarter revenue on Monday, as strong demand for its athletic apparel and sneakers in Europe eased the company’s lower sales in China, its most profitable market, following pandemic-related lockdowns in the country.
Nike Revenue Increases this Year
The company’s shares increased about 1% to USD 111.80 after the bell, and Nike announced a new USD 18 billion class B stock repurchase plan.
Affluent customers are splurging on higher-price products and remain primarily unaffected by decades of high inflation, helping Nike sustain a pandemic-induced boom in athletic wear.
In the reported quarter, the company’s sales in Europe, Africa, and the Middle East increased 9% to USD 3.25 billion. However, sales in Greater China dropped 19%, induced by strict COVID-19 lockdowns.
For the fiscal year 2023, Nike forecasts revenue to increase in the low double-digit percentage range on a currency-neutral basis.
Analysts say that the company’s prospects in China differ this year even as the pandemic-related restrictions have been lifted in several major cities as people cut down on expenses. A penchant for locally grown brands such as Li Ning and Anta remains strong.
According to IBES data from Refinitiv, Nike recorded fourth-quarter revenue of USD 12.23 billion, hammering valuations of USD 12.06 billion.
Simeon Siegel, Managing Director and award-winning Senior Analyst at BMO capital markets, said that the company’s consumers could now take a post-pandemic breather.
The company’s net revenue fell to USD 1.44 billion, or 90 cents per share in the fiscal quarter ended March 31st, from USD 1.51 billion, or 93 cents per share, the previous year.
Nike recorded a USD 150 million charges related to its choice to exit Russia and transition of business models in a few South American countries.
Due to the ongoing supply chain disruptions, the company said that its inventories increased 23% to USD 8.4 billion as more of its products remain in transit.