According to Nike, inventories climbed 16% in the fiscal Q3 2023 compared to the same period in 2022.
Although Nike Inc (NYSE: NKE) is still dealing with its bloated investor, which has continued to affect its China sales, the company squashed estimates in the fiscal Q3 2023. Nike released its fiscal Q3 2023 result on March 21, noting that it performed better than Wall Street’s estimates. The quarterly revenue grew 14% YoY and 19% on a currency-neutral basis to $12.4 billion. Meanwhile, the analyst’s expectation was $11.47 billion. It also reported 79 cents in earnings per share, surpassing the expected 55 cents.
According to Nike, direct sales in the fiscal Q3 2023 popped 17% on a reported basis and up 22% on a currency-neutral basis to $5.3 billion. In addition, the footwear manufacturer realized an increase of 10% on a reported basis in its digital sales. Nike added that wholesale revenue surged 12% on a reported basis and 18% on a currency-neutral basis. Speaking on the impressive fiscal Q3 2023 performance, Nike President and CEO John Donahoe stated:
“Nike’s strong results in the third quarter offer continued proof of the success of our Consumer Direct Acceleration strategy. Fueled by compelling product innovation, deep relationships with consumers and a digital advantage that fuels brand momentum, our proven playbook allows us to navigate volatility as we create value and drive long-term growth.”
The executive vice president and chief financial officer, Matthew Friend, said the brand continually creates “separation in the marketplace” with its distinction and execution. He also spoke on inventory, adding that Nike has made remarkable progress over time through the fiscal Q3 2023. Notably, the manufacturing company has been in the process of getting rid of its excess inventory since November. Walmart (NYSE: WMT), Target (NYSE: TGT), Gap (NYSE: GPS), and other retailers are under pressure to clear out inventory. Unfortunately for Nike, the excess inventory has weighed in on its margins, as shown in the fiscal Q3 results. The company noted that the gross margin declined 3.3 percentage points to 43.3% for the quarter. Although the CEO said in fiscal Q2 that Nike is past its inventory peak, the company warned that gross margins were expected to take a hit during the fiscal third quarter.
According to Nike, inventories climbed 16% in the fiscal Q3 2023 compared to the same period in 2022. However, the company’s executives have assured investors of their confidence in the manufacturer to end the fiscal year with healthy inventory levels. They also said there would expectedly be “even leaner investors” than expected.
At press time, Nike stock is down 2.25% in extended trading hours. This follows a close of $125.61, gaining 5.55% in the last five days.
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