Nike falls as profitability concerns outweigh strong U.S. demand - BNN Bloomberg

Nike Inc. slipped in late trading Thursday after profitability fell short of expectations, offsetting robust demand in the footwear giant’s home market.

Chief Executive Officer John Donahoe said that the world’s largest sportswear company is working to “manage through volatility” amid his multiyear plan to reduce its reliance on wholesale partners. The results show that piece of the strategy is paying off, with direct-to-consumer sales rising 8 per cent to US$5.1 billion in the quarter -- but concerns are lingering about inventory management.

China, which has seen its Covid Zero policy weigh on the economy, also remains a key concern. Nike said sales fell 16 per cent in its Greater China region in the quarter. Despite volatile demand, executives have said they still see the country as a long-term growth market and have pledged to continue pumping investment into the region.

Investors will listen for more details in Nike’s upcoming conference call. With the odds of a recession increasing, Wall Street will also be eager to hear forward-looking statements from executives on the evolution of demand and inflation.

Source: News Formal (newsformal.com)

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