Nike sales jump as it works through inventory glut

Business Thursday 23/March/2023 10:52 AM
Nike sales jump as it works through inventory glut

Beaverton: Nike made progress working through the inventory glut that squeezed the sneaker maker last year, reporting a 14 per cent jump in quarterly sales and raising its revenue growth target, CNN Business reported.

The sportswear company said its inventory increased 16 per cent in the quarter ended February 28 compared with the same period a year ago. Inventories had swelled by more than 40 per cent in each of the prior two quarters, according to CNN Business. The company ended February with USD 8.9 billion of inventories, down from USD 9.3 billion at the end of November.

"We are increasingly confident that we will exit the year with healthy inventories across the marketplace," Nike finance chief Matthew Friend said on Tuesday on a conference call with analysts.

Higher markdowns once again hurt profit margins, though Nike's quarterly earnings came in above Wall Street's expectations. The company said net income in the quarter fell 11 per cent to USD 1.24 billion.

Recent unrest in the banking sector, along with elevated inflation and rising interest rates, has weighed on US consumer spending. Spending at retailers declined in February, according to the Commerce Department, and consumer sentiment fell in March for the first time in four months, according to a University of Michigan survey.

Friend said that Nike was closely monitoring the building pressure on consumer confidence but that demand for Nike's products was elevated despite macroeconomic uncertainty.

According to CNN Business, executives said that full-price sales remained strong and that the company had been able to increase prices across its portfolio. The company is now forecasting a revenue growth rate in the high mid-single-digit percentage for the fiscal year ending in May.

Nike executives said last year that they thought the company was past its inventory peak. Nike had started increasing discounting last summer but worked more aggressively to clear out items in the fall quarter.