Nike skids on downbeat guidance by China stance

Bloomberg

Nike Inc shares fell as the world’s largest sportswear company offered a downbeat full-year forecast for gross margin and said it was being cautious in its outlook for the vital China market.
The retailer said it expects gross margin to be flat to down 50 basis points, after it reported results that surpassed analysts’ estimates and overcame supply-chain pressures that have persisted for many months. Management also expects revenue to grow by a percentage in the low double digits this fiscal year.
Sales in the Greater China region, where Nike has struggled over the past year, fell 20% in the quarter at constant currencies and missed analysts’ estimates. Covid-19 shutdowns hurt its business there last quarter, but executives said on a conference call with analysts that it still sees China as a long-term growth market and will continue to invest in the region.
“We did take a cautious approach to Greater China,” Chief Financial Officer Matt Friend said on a conference call with analysts. “And we’re doing that as we look at what disrupted our performance in the fourth quarter.”
Nike said over 60% of its business in China was affected by Covid disruptions across more than 100 cities. Its
central logistics center took three weeks to return to 100% capacity.

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