Nike's Q1 Earnings Disappoint: Revenue Declines Amid Supply Chain Issues
Nike's (NKE) latest earnings report has sent shockwaves through the market, as revenue and profits declined in the first quarter. The world's largest sportswear brand saw revenue fall 4% to $11.2 billion, missing analyst consensus at $11.32 billion.
Despite growing its margins by expanding gross margin by 60 basis points to 42.8%, due to lower warehousing and logistics costs, operating income was flat, and earnings per share fell from $0.49 to $0.48, which beat the consensus at $0.43.
Nike's guidance for the full fiscal year is even more concerning, with a forecasted revenue decline in the high single digits, implying a decline of around 10% for the rest of the year. The company cited decisions to cut back on oversupplied product in the Jordan brand, sportswear, and Greater China as reasons for the decline.
Nike's CEO Elliott Hill has been at the helm for two years now, but the results have not improved. The collapse in the stock is warranted, and it's fair to question how long Hill will be around without visible improvement in the results.