At Nike, business is going well despite global inflation and recession concerns, with sales increasing significantly in the second quarter of the financial year. However, despite discount campaigns, the reduction in inventories is proceeding slowly.
Strong demand in North America and Europe has helped Nike, the world's largest sporting goods manufacturer, to jump in sales. Revenues rose 17 percent to $13.32 billion in the second quarter of the fiscal year compared to a year earlier, the company said after the market closed. Analysts had forecast sales of just $12.57 billion.
Strengthening business in the US more than offset weakness in the Chinese market. In North America, sales growth was 30 percent. In China, on the other hand, revenue fell by three percent due to the corona restrictions. Net income was roughly flat at $1.33 billion.
Analysts had assumed that Nike can boost demand for its shoes and sporting goods with significant discounts in order to keep interest high despite the sluggish economy and to clear its overstocked warehouses. At the end of the first quarter, Nike was sitting on $9.7 billion worth of merchandise that the company had accumulated in anticipation of further supply problems. Meanwhile, the group is still sitting on unsold goods worth 9.3 billion dollars.
Gross margin fell three percentage points to 42.9 percent in the quarter. In after-hours trading, Nike shares jumped more than 12 percent. Year-to-date, Nike shares have lost about 38 percent of their value on Wall Street. Nike is the undisputed leader in the sporting goods industry, followed by Adidas, Puma, Sketchers and Under Armor. At the World Cup, however, Adidas was at the top: Argentina, playing in jerseys from the German manufacturer, won the title by beating the team from France, which is under contract with Nike.
