Sneaker and athletic apparel company Nike (NKE) has reported its first earnings miss in three years due to lower profit margins and stagnant inventories.
Nike’s stock is down 3% after the retailer announced earnings per share of $0.66 U.S. versus $0.67 U.S. that was expected on Wall Street, according to Refinitiv data.
Revenue in the quarter beat expectations, coming in at $12.83 billion U.S. compared to $12.59 billion U.S. that was forecast by analysts who track the company’s progress.
Nike has now beat revenue estimates for seven consecutive quarters as sales surged in China after the country ended its Covid-19 restrictions.
For its full fiscal year, Nike’s revenue amounted to $51.2 billion U.S., up 10% from a year earlier and ahead of analysts’ expectations of $50.99 billion U.S.
However, profits also disappointed for the full fiscal year. Nike announced earnings per share of $3.23 U.S., which was just shy of the $3.24 U.S. that Wall Street had expected.
Nike’s net income for the entire fiscal year was $5.1 billion U.S., down 16% from a year earlier.
In terms of forward guidance, Nike said that, for fiscal 2024, it expects revenue to grow by mid-single digits. Analysts had expected year-over-year growth of 6.3%, according to Refinitiv.
Nike also said that it expects gross margins to improve between 1.4 and 1.6 percentage points for the 2024 fiscal year.
The company said it has been hurt by a pullback in consumer spending, noting that its
gross margins fell 1.4 percentage points to 43.6% during the latest quarter.
In terms of its inventories, Nike said that its inventory value came in at $8.5 billion U.S. at the end of fiscal Q4, which is flat compared with the previous year.
Quarter-over-quarter, Nike unwound about $400 million U.S. in inventories.
Before the latest earnings print, Nike’s stock had gained 11% over the past year to trade at $113.37 U.S. a share.
