Despite an earnings miss during the fiscal 2023 Q4, Nike beat revenue estimates for the seventh straight quarter.
While Nike (NYSE: NKE) surpassed estimates in its fiscal 2023 Q4 revenue, the company’s profit for the same quarter was short of expectations. For the first time in three years, the footwear manufacturing company missed on earnings due to lower margins in the fourth quarter. Nike announced its fiscal 2023 Q4 and full-year results on the 29th of June, revealing that lower margins impacted its profits during the three months.
Nike Releases Fiscal 2023 Q4 Performance Results
According to the fiscal Q4 report, Nike saw its revenue increase 5% YoY to $12.8 billion, while expectations were $12.59 billion. The quarterly revenue was also up 8% on a currency-neutral basis. The company noted that Nike Direct reported revenue for the same period was $5.5 billion, representing a 15% increase compared to the previous year. This was led by a 24% growth from Nike-owned stores and another 14% surge from Nike Brand Digital.
On the other hand, Nike posted earnings per share of 66 cents, falling short of the expected 67 cents. The manufacturing company’s President and CEO, John Donahoe, commenced on how Nike performed during the fiscal 2023 Q4.
“NIKE’s strong results make clear that our strategy is working. FY2023 was a milestone 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,” told the CEO.
However, the retailer also experienced a rare miss as net income was $1.03 billion compared with $1,44 billion in the year before. It also noted that its gross margin fell 140 basis points to 43.6%, majorly because of the higher cost of product input and freight and logistics costs. The unfavorable changes in net foreign currency exchange rates also contributed to the lower gross margin. Furthermore, Nike stated that selling and administrative expenses went up 8% to $4.4 billion.
Higher Sales in China
The company revealed that sales rose by about 5% from $12.23 billion the year before to $12.83 billion. Despite an earnings miss during the fiscal 2023 Q4, Nike beat revenue estimates for the seventh straight quarter. This can be traced to the sales boom in China as the company resumes its pre-covid operations. It has rolled back its zero-Covid policy, which severely hurt its economy. The quarter after the poly was lifted, China’s economy jumped 4.5%, and US companies in the country confirmed higher sales.
For the coming quarter, Nike expects revenue to be flat to up low single digits. Meanwhile, according to Refinitiv, analysts’ expectations were for sales to grow by 5.8%. In addition, the manufacturer is looking forward to its gross margin dropping between 0.5 to 0.75 percentage points.