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Earnings Results: Nike is latest company to see expenses rise

Nike Inc. shares fell more than 1% in the late session Thursday after the sneaker and apparel maker reported quarterly sales slightly below Wall Street expectations and said wages and overhead expenses took a bigger bite of its revenue.

Nike
NKE,
+1.36%

said it earned $1.9 billion, or $1.16 a share, in the fiscal first quarter, compared with $1.5 billion, or 95 cents a share, in the year-ago period.

Revenue rose 16% to $12.2 billion, from $10.6 billion a year ago. Gross margins also improved, but selling and administrative expenses increased 20% to $3.6 billion, the company said.

That includes “continued investments” in digital marketing to support pandemic-related demand for online sales, and operating overhead expenses that rose 15% mostly due to higher wage-related expenses, the company said.

FactSet consensus called for EPS of $1.12 on sales of $12.5 billion for Nike.

As a percentage of total revenue, selling and administrative expenses rose to 29% of sales in the fiscal first quarter of 2022, from 28% in the fiscal first quarter a year ago.

Inventories were flat at $6.7 billion, Nike said.

“We have the right playbook to navigate macroeconomic dynamics, as we create value through our relentless drive to fuel the future of sport,” Chief Executive John Donahoe said in a statement.

Retailers are struggling to hire and retain workers, with Target Corp.
TGT,
+0.37%

announcing earlier Thursday it would offer more work hours for its employees and providing steadier schedules. Several retailers have also added benefits and perks such as assistance with educational expenses.

Earlier this year, Nike revealed problems with its manufacturing in Vietnam due to the pandemic.

Supply-chain snags and a tight labor market have plagued businesses from aviation to warehousing.

This week, home builders KB Home
KBH,
+0.54%

and Lennar Corp.
LEN,
+1.47%

said industry-wide supply and labor shortages continued to hamper operations, and FedEx Corp.
FDX,
-0.07%

cited difficulties in hiring and supply-chain disruptions.

Nike shares have gained about 13% so far this year, compared with gains of around 19% for the S&P 500 index
SPX,
+1.21%
.

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