Nike (NKE) reported fourth quarter sales that topped Wall Street expectations, but profits came in lower than expected after the bell on Thursday.
Nike stock was down about 3% after the report.
Gross margins fell to 43.6% in the quarter ended May 31, down from 45% in the year-earlier period. Nike said in its release that the decline was “primarily due to higher product input costs and elevated freight and logistics costs, higher markdowns and continued unfavorable changes in net foreign currency exchange rates — partially offset by strategic pricing actions.”
Here’s how Nike’s results stacked up against Wall Street analyst expectations, according to Bloomberg consensus estimates:
Revenue: $12.83 billion versus $12.59 billion expected
Adj. earnings per share (EPS): $0.66 versus $0.67 expected
Gross margin estimate: 43.6% versus 43.5% expected
Nike’s stock stumbled going into the report, with shares down 6% on the year and analysts cutting their price targets on shares of the athletic apparel brand in recent weeks. Fears had swirled about dwindling North American demand and struggling revenue growth in Greater China due to COVID-19 restrictions.
Nike showed a recovery in Greater China with sales of $1.81 billion, higher than the $1.64 billion analysts had been expecting and up 16% from a year ago. Inventories were nearly flat from a year ago, boosting hopes that Nike’s inventory glut has improved.
“It seems like there’s a nice progression here [in Greater China revenue],” Brian Nagel, Oppenheimer & Co. managing director and senior analyst, told Yahoo Finance Live. “You have a weak December when COVID was an issue in China and then started to have a rebound in January and February when some of the COVID restrictions were lifted, and we get this number here…directionally it’s where the market wants to see it.”
Josh is a reporter for Yahoo Finance.