Sneaker giant Nike’s (NKE) latest earnings easily beat Wall Street’s forecasts on both the top and bottom lines despite sluggish sales in China.
The Oregon-based company reported earnings per share (EPS) of $0.79 U.S. versus $0.55 U.S. that was expected by analysts who cover the company. Nike’s revenue totaled $12.39 billion U.S. compared to $11.47 billion U.S. that had been forecast.
Nike said sales in China, its third-biggest market by revenue, fell 8% during the company’s fiscal third quarter to $1.99 billion U.S. That country’s zero-COVID-19 policy has weighed on Nike’s operations.
Also, Nike said its gross margins in the latest quarter declined to 43.3%, a decrease of 3.3 percentage points, due to higher markdowns and promotions used to liquidate its inventory.
However, Nike chief executive officer (CEO) John Donahoe told investors during an earnings call that the company is now past its inventory peak.
Outside of China, Nike saw double-digit sales increases in its other markets.
Sales in North America rose 27%. In Europe, Middle East and Africa, revenue grew 17% from a year ago. In Asia and Latin America, sales climbed 10% higher.
Additionally, Nike’s digital sales increased 20% in the quarter and represented 27% of total sales, up from 9% before the pandemic.
Looking ahead, Nike said that it now expects revenue for its entire fiscal year to grow by high single digits, compared to mid single digit guidance it gave previously.
Nike’s stock has declined 6% over the past year to trade at $125.61 U.S. per share.
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