Nike Sales Increase by 14% While Facing an Inventory Glut

As Nike Inc. works to offload its glut of inventory, the company reported a 14% increase in sales for the quarter ending on February 28, beating out Wall Street’s expectations, according to The Wall Street Journal.

The sportswear imprint reported a 16% increase in inventory when compared year over year, primarily due to supply chain disruptions and changing consumer demands. The company’s inventories had increased by upwards of 40% in the two preceding quarters.

Nike concluded the last quarter with $8.9 billion USD of inventories, marking a roughly $400 million USD reduction from the previous quarter’s $9.3 billion USD.

“We are increasingly confident that we will exit the year with healthy inventories across the marketplace,” Nike finance chief Matthew Friend said Tuesday during a conference call, per the outlet.

Profit margins suffered due to increased markdowns and promotions used to liquidate inventory, and the brand’s net income for the three-month period declined by 11% to $1.24 billion USD, or 79 cents per share. One year prior, the company reported a net income of $1.4 billion USD, or 87 cents per share, in the same period. Shares for the company declined by more than 1% on Wednesday.

As Nike looks to generate more sales in China while the region recovers from the COVID pandemic, last quarter’s figures were not promising. In the fiscal third quarter, the company’s sales fell 8% to $1.99 billion USD in the region, as consumers dealt with further lockdowns and rising case numbers. According to CNBC, Wall Street had estimated Nike’s sales in China to reach $2.09 billion USD.

Despite its fiscal decline in China, Nike saw increases across all of its other markets. In North America, sales climbed by 27%, and in Europe, the Middle East and Africa, those figures increased by 17%. Meanwhile, in Asia Pacific and Latin America, revenue was up by 10%.

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