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With robust earnings, Nike sees itself at a “much stronger competitive position” from the pre-pandemic levels. Strong demand picking up in North America has helped Nike to overcome the slowdown due to supply chain disruptions.
On Monday, December 20, footwear giant Nike Inc (NYSE: NKE) reported strong robust earnings for the fiscal second quarter (Q2) of 2022. Despite the ongoing supply chain issues, Nike reported better-than-expected earnings for the fiscal second quarter.
The company reported a revenue of $11.36 billion with earnings per share at $0.83. North America, in particular, contributed to the strong growth of the company. Nike’s revenue from North America stood at $4.48 billion against the analysts’ estimates of $4.18 billion. this represented a strong 12% growth year-over-year. Also, the net income stood at $1.3 billion, up 75 from Q2 2020. In the official press release, Nike President and CEO John Donahoe noted:
“NIKE’s strong results this quarter provide further proof that our strategy is working, as we execute through a dynamic environment. We are now in a much stronger competitive position today than we were 18 months ago.”
Well, the recent announcement sent the NKE stock soaring in the after-hours. The NKE stock gained 3.81% with the price moving past $160 levels.
Nike: Supply Chain Issues in Q2 2022
Alike other players in this space, Nike grappled with supply chain issues. The Covid-related factory closures had slowed inventory shipments denting the progress. Sales in China and other parts of East Asia suffered major lockdowns on the spread of the COVID-19 Delta variant. The company wrote:
“Second Quarter revenues were flat on a currency-neutral basis as we continue to manage the ongoing impact of supply chain challenges across the marketplace. Revenues in Greater China and APLA declined, largely due to lower levels of available inventory resulting from COVID-19 related factory closures”.
However, Nike said that it was out of deep waters with the flow of goods picking up during the recent quarter. “While closures had an impact across our portfolio, North America and EMEA delivered growth due to higher levels of in-transit inventory entering the second quarter,” the company said.
Nike’s Chief Financial Officer Matt Friend also said that the company’s East Asia operations are picking up as factories in Vietnam are up and running. furthermore, the production is also back at 80% of the pre-closure levels. The Nike CFO remains pretty confident that supply levels will normalize worldwide heading into fiscal 2023. He further added:
“Demand for Nike remained incredibly strong. With season-to-date holiday retail sales across the total market growing double digits, energized by the continued momentum from the return to sport and the beginning of an outstanding holiday season.”
Apart from strengthening its core business, Nike is also making major moves in other areas. Nike has entered the emerging space of Metaverse and NFTs with its recent acquisition of RTFKT Studios. This clearly indicates that Nike intends to sell branded shoes and apparel in the virtual world. The acquisition has happened for an undisclosed amount.