In China, Nike is dealing with a long recovery from the pandemic as well as global turmoil.
Nike stock jumped more than 5% Tuesday morning as the footwear company stated its China business is expanding, despite recent reaction against Western brands and a merchandise shortfall in the region. Nike’s stock had fallen 22% this year before Monday’s revelation.
Nike’s results bode well for other athletic wear merchants with global visibility, such as Adidas and Puma. Due to a number of unpredictable elements that could change, Nike has yet to issue its outlook for the upcoming fiscal year. Still, there’s a chance that trends will sway in the opposite direction.
Nike reported that sales in China declined 8% year over year in the three months ending Feb. 28, which was better than the analysts’ prediction of a 12% loss. It was also a significant improvement from Nike’s previous quarter’s 24 percent loss. Nike’s most profitable market has always been China.
Nike has teamed with Top Sports and Pou Sheng, two Chinese retail distributors, to expand its footprint in the region. A recent brand campaign connected to the Beijing Olympics was also mentioned.
Nike confirmed its forecast for mid-single-digit revenue growth in the current fiscal year compared to the previous 12-month period. Revenue was expected to increase by 5.3 percent, according to analysts.
Nike is navigating a complicated climate on its home turf and largest market in North America, in addition to attempting to re-establish growth in China.
While consumer demand for the company’s sneakers and apparel looks to be strong, a clogged supply chain remains a problem. According to Nike, transit delays in North America are still longer than in other regions.
Nike has stepped up their procurement timetable in order to obtain enough merchandise for the back-to-school rush, according to Friend, in order to prepare for the autumn season.