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Nike’s quarterly profits decline as a result of rising costs, but sales are still strong

<p>Despite greater sales, Nike announced a decline in quarterly profitability on Thursday as a result of higher expenses and the selling of unsold inventory.</p>
<p>The sports juggernaut reported $1.0 billion in earnings for the quarter ended May 31, a decrease of 28% from the prior quarter.</p>
<p>Revenues increased by 5% to $12.8 billion.<img decoding=”async” class=”alignnone wp-image-47167″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/06/www.theindiaprint.com-nikes-quarterly-profits-decline-as-a-result-of-rising-costs-but-sales-are-still-strong-960×0-2-11zon-750×500.jpg” alt=”” width=”1498″ height=”998″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/06/www.theindiaprint.com-nikes-quarterly-profits-decline-as-a-result-of-rising-costs-but-sales-are-still-strong-960×0-2-11zon-750×500.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2023/06/www.theindiaprint.com-nikes-quarterly-profits-decline-as-a-result-of-rising-costs-but-sales-are-still-strong-960×0-2-11zon-768×512.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2023/06/www.theindiaprint.com-nikes-quarterly-profits-decline-as-a-result-of-rising-costs-but-sales-are-still-strong-960×0-2-11zon-150×100.jpg 150w, https://www.theindiaprint.com/wp-content/uploads/2023/06/www.theindiaprint.com-nikes-quarterly-profits-decline-as-a-result-of-rising-costs-but-sales-are-still-strong-960×0-2-11zon.jpg 959w” sizes=”(max-width: 1498px) 100vw, 1498px” /></p>
<p>Lower profit margins were recorded by Nike during the time, with the company blaming “higher product input costs and elevated freight and logistics costs” as well as “higher markdowns.”</p>
<p>In the aftermath of Covid-19 supply chain issues that caused delayed shipments, Nike has used promotions during the last year to discount underselling items. This is similar to what other retailers like Walmart and Target have done.</p>
<p>Analysts were informed by Chief Executive John Donahoe that the move will position the business for future profitability.</p>
<p>Nike is a “solid brand,” according to Neil Saunders of GlobalData, but it has to reconsider its inventory management and build more connections with other suppliers, like it just did with Macy’s. In recent years, the corporation has placed a strong emphasis on direct sales.</p>
<p>The slower demand for shoes and clothing is causing wholesale orders to drop, inventory to rise, and more marketing and promotional efforts to increase sales, which is unfortunate for Nike, according to Saunders.</p>
<p>“This has happened at the same time as the normal mix of rising expenses, which affects all shops. When all of these factors are considered, the firm is being squeezed.</p>
<p>According to Saunders, “further markdowns” would be necessary, “which will heap further pain on the bottom line.”</p>
<p>In after-hours trade, Nike shares fell 4.2 percent to $108.65.</p>
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