The US sporting goods supplier Nike Inc. had to accept declines in sales and earnings in the fourth quarter of the 2021/22 financial year. Nevertheless, the group exceeded market expectations with the results published on Monday evening after fears of even greater losses. Business was primarily impacted by the development of the Covid-19 pandemic in China and ongoing delivery problems.
Because of Covid-19: Nike sales in China drop by 19 percent
In the months of March to May, group sales amounted to 12.2 billion US dollars (11.6 billion euros). It was thus one percent below the level of the same quarter of the previous year. Adjusted for changes in exchange rates, revenues increased by three percent. The main brand Nike contributed the majority of sales, which at 11.7 billion US dollars fell short of the previous year’s level by one percent (currency-adjusted +3 percent). In North America, their revenues fell by five percent to 5.12 billion US dollars, in Greater China they even shrank by 19 percent (currency-adjusted -20 percent) to 1.56 billion US dollars due to the tightened corona protection measures.
On the other hand, the EMEA region, which comprises Europe, the Middle East and Africa, went up. There, brand sales rose by nine percent (currency-adjusted +20 percent) to 3.25 billion US dollars. Sales in Asia Pacific and Latin America totaled $1.68 billion, up 15 percent (+24 percent at constant currency) from the prior-year quarter. The worldwide sales of the smaller group brand Converse fell by one percent to 593 million US dollars, currency-adjusted they increased by three percent.
Higher freight and logistics costs weighed on the result
The difficult situation in China, higher freight and logistics costs as well as increased expenses for personnel and marketing weighed on the result. In addition, there were negative one-off effects totaling around USD 150 million, which resulted from the discontinuation of activities in Russia and the restructuring of the sales model in Argentina, Chile and Uruguay, among other things. The net profit shrank compared to the same quarter last year by five percent to 1.44 billion US dollars (1.36 billion euros). However, analysts had expected an even more significant decline.
For the full fiscal year 2021/22, Group sales increased by five percent (+6 percent at constant currency) to USD 46.7 billion as all market regions except China recorded growth. Net income was $6.05 billion, up 6 percent from the prior year.