US' Nike's revenues up 14% to $12.4 bn in Q3 FY23, net income down

On a reported basis, Nike’s direct sales amounted to $5.3 billion in Q3 FY23, showing a 17 per cent increase year over year, while on a currency-neutral basis, the increase was 22 per cent. Nike Brand Digital sales also experienced an increase of 20 per cent on a reported basis or 24 per cent on a currency-neutral basis compared to the same period of last year. Wholesale revenues grew, with a reported basis increase of 12 per cent and a currency-neutral basis increase of 18 per cent compared to Q3 FY22, the company said in its financial statement.

The Nike brand saw revenues of $11.8 billion in Q3 FY23, representing a 14 per cent increase on a reported basis and a 19 per cent increase on a currency-neutral basis year over year. North America, Europe, the Middle East and Africa (EMEA) and Asia Pacific and Latin America (APLA) all experienced double-digit growth in this quarter. Greater China saw a 1 per cent increase on a currency-neutral basis, despite experiencing a challenging December due to the shift in COVID-19 policies. On a reported basis, Greater China's revenues declined by 8 per cent compared to Q3 FY22.

Converse, a subsidiary of Nike, experienced revenues of $612 million, which represents an 8 per cent increase on a reported basis and a 12 per cent increase on a currency-neutral basis in Q3 FY23 compared to Q3 FY22. Double-digit growth was reported across all channels in North America, although Asia experienced a decline.

Despite the positive revenue growth, Nike's gross margin decreased by 330 basis points to 43.3 per cent in the period under review. The decline was attributed to higher markdowns to liquidate inventory, continued unfavourable changes in net foreign currency exchange rates, higher product input costs, and elevated freight and logistics costs. The decline was partially offset by strategic pricing actions.

Selling and administrative expenses increased by 15 per cent to $4 billion, while demand creation expenses increased by 8 per cent to $0.9 billion, primarily due to advertising and marketing. Operating overhead expenses increased by 17 per cent to $3 billion, primarily due to wage-related expenses and Nike Direct variable costs, the statement added.

As of February 28, 2023, Nike's inventories were $8.9 billion, which represents a 16 per cent increase compared to the prior year period. The increase was primarily driven by higher product input costs and elevated freight costs. Cash and equivalents and short-term investments were $10.8 billion, down approximately $2.7 billion from the previous year, due to cash provided by operations being more than offset by share repurchases, cash dividends, and capital expenditures.

“Nike’s strong results in the third quarter offer continued proof of the success of our Consumer Direct Acceleration strategy,” said John Donahoe, president and CEO, Nike, Inc. “Fuelled 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.”

Fibre2Fashion News Desk (KD)