Nike sales increase, but supply chain concerns and inventory hurt profitability.

Nike reported a good first fiscal quarter on Thursday, despite supply chain difficulties and decreased sales in Greater China, its third-largest revenue area.

Nike is experiencing supply chain challenges similar to other retailers, such as a recent increase in shipping costs and transit durations. According to the corporation, inventory levels increased throughout the quarter compared to the same time last year.

Shares of the business fell by nearly 5% in after-hours trade.

According to a Refinitiv survey of analysts, Nike fared in its first fiscal quarter relative to what Wall Street had predicted:

• Earnings per share: 93 cents vs the anticipated 92 cents
• Revenue: $12.69 billion vs the anticipated $12.27 billion

When compared to the same time a year prior, Nike's net income dropped 22% to $1.5 billion, or 93 cents per share, for the three months that ended on August 31.

In comparison to the same quarter last year, revenue increased by 4% to $12.7 billion.

Nike has recently changed its business model and is aiming to sell less sneakers and other products through wholesale partners like Foot Locker and more of them directly to consumers. The business reported on Thursday that its direct sales increased by 8% to $5.1 billion and that its digital-brand sales increased by 16%. Conversely, Nike's wholesale division saw a 1% gain in revenues.

In its first fiscal quarter, Nike reported that their inventory increased 44% to $9.7 billion from the same period the previous year. The firm attributed this increase to supply chain difficulties, which were largely offset by high customer demand.

Greater China's overall sales were down 16% from about $2 billion a year ago to roughly $1.7 billion. The company has experienced economic disruption in the area as a result of Covid lockdowns. Nike has previously stated that it anticipated problems in Greater China to have an impact on its company.

Nike's largest market, North America, had a 13% increase in overall sales to $5.5 billion in the first fiscal quarter from around $4.9 billion in the same quarter last year. The global leader in sneakers has often claimed that despite inflation, customer demand hasn't decreased, particularly in the American market.

Here is the earnings announcement for the company.