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Despite small sales increase, Nike profits fall in the third quarter

By Jan Schroder


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Nike store in Singapore. Credits: Nike Inc.

US sporting goods supplier Nike Inc. reported mixed figures for the third quarter of the 2023/24 financial year, though results were at least slightly better than analysts had expected in advance.

In a conference call, CEO John Donahoe admitted that the latest figures were in line with management's forecasts, but not with Nike's potential. He therefore announced "further adjustments" in marketing, product portfolio and wholesale distribution.

Growth in America and Asia can more than compensate for sales losses in Europe

In the three months prior to 29 February, group turnover amounted to around 12.4 billion dollars, corresponding to an increase of 0.3 percent compared to the same quarter of the previous year. Even adjusted for exchange rate fluctuations, there was a slight increase.

The majority of revenue was contributed by the main brand Nike, whose sales increased by 2 percent (currency-adjusted +2 percent) to 11.9 billion dollars. In North America, the label increased by 3 percent (currency-adjusted +3 percent) to 5.07 billion dollars, and in Greater China by 5 percent (currency-adjusted +6 percent) to 2.08 billion dollars. Sales in the other markets of the Asia-Pacific region and in Latin America totalled 1.65 billion dollars, exceeding the level of the same quarter in the previous year by 3 percent (+4 percent adjusted for currency effects).

In contrast, the EMEA region, which comprises Europe, the Middle East and Africa, saw a downward trend. Sales there shrank by 3 percent (currency-adjusted -4 percent) to 3.14 billion dollars. Sales of the smaller portfolio brand Converse slipped by 19 percent (currency-adjusted -20 percent) to 495 million dollars due to losses in North America and Europe.

Quarterly profit shrinks by 5 percent

The group was able to increase its gross margin, but at the same time had to record restructuring expenses and higher marketing expenditure. As a result, net profit fell by 5 percent to 1.17 billion dollars compared to the same period last year.

In the first nine months of the current financial year, group turnover totalled just under 38.8 billion dollars. This was 1 percent (currency-adjusted +1 percent) above the previous year's level. Net profit rose by 4 percent to 4.20 billion dollars.

CFO Matt Friend explained that the group expects a small increase in turnover in the final quarter. In the first half of the coming 2024/25 financial year, however, sales are expected to decline by a low single-digit percentage due to the planned changes to the product range and persistently difficult economic conditions.

This article originally appeared on FashionUnited.DE. Translation and edit by: Rachel Douglass.

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