Nike beat sales expectation for the fourth quarter and fiscal year 2023, but fell short when it came to profit.
The athletic giant reported Q4 revenues were $12.8 billion, up 5 percent compared to 2022. This beat Nike’s previously issued guidance for Q4, which had revenues growing in the flat to low single-digits. It also came in ahead of analysts’ expectations of $12.59 billion in sales. Net income was down 28 percent to $1 billion, with diluted earnings per share of $0.66, which was down 27 percent year-over-year. Analysts surveyed by Yahoo were looking for EPS of 0.67 for Q4.
For the full year, revenues were $51.2 billion, up 10 percent over the prior year. Nike had been aiming for full-year revenue to grow in the high single-digits, up from its prior guidance in the mid-single-digits. Net income for the year was $5.1 billion, down 16 percent, with diluted earnings per share of $3.23, which was down 14 percent.
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Inventories, a key concern for analysts, were flat year-over-year for the period ending in May. The news comes as retailers such as Macy’s and DSW announce renewed wholesale partnerships with Nike as the brand looks to right size inventory.
Nike’s gross margin took a hit in Q4 due to higher freight and logistics costs, more markdowns and foreign currency exchange headwinds.
Nike CEO and president John Donahoe said in a statement that the company’s results were a testament to the Swoosh’s long-term strategy.
“Our CDA strategy is working. Our brands have strong energy. Our innovation pipeline is as relentless as ever, and we’re executing against what matters most to consumers,” Donahoe said in a call with analysts.
In Q4, Nike brand revenue grew 5 percent to $12.2 billion and Nike Direct revenues were up 15 percent to $5.5 billion. Q4 Wholesale revenues were $6.7 billion, down 2 percent. North America revenues grew 5 percent and Greater China revenue grew 25 percent.
Looking ahead, Nike expects fiscal year 2024 revenues to grow in the mid-single digits, accounting for headwinds from the wholesale shipping timing from the prior year. In Q1, Nike expects revenues to be flat to up in the low single digits due to its efforts to reduce excess inventory.
“We are taking a balanced approach to planning our business, building on our proactive decisions more than six months ago to tighten buys,” said Nike CFO Matthew Friend. “We expect this to translate into an improved marginal cost of growth, expanding profitability and higher returns on invested capital.”
