Sales growth at Nike is attributed to North American demand, but the company has delayed its outlook due to global unrest.

• North America demand propelled Nike to exceed analysts' expectations in its fiscal third quarter.
• Nike is withholding its forecast for the upcoming year due to uncertainties about inflation, war overseas, and clogged supply chains.
• Matthew Friend, the Chief Financial Officer, stated on a post-earnings conference call that the company's focus is on managing what it can control. He explained that there are various new factors contributing to increased levels of volatility.

On Monday, shares of the sneaker retailer rose more than 5% in extended trading after its fiscal third-quarter results exceeded analysts' expectations due to strong demand in North America.

Nike is withholding its forecast for the upcoming year due to uncertainties about inflation, war abroad, and congested supply chains, and will only provide an update after reporting fiscal fourth quarter results.

Matthew Friend, the Chief Financial Officer, stated on a post-earnings conference call that the company's focus is on managing what it can control. He explained that there are various new factors contributing to increased levels of volatility.

Nike's global reach makes it a bellwether for how other retailers are managing challenges such as high oil prices, inflation, disrupted supply chains, and global unrest caused by Russia's invasion of Ukraine.

Nike's sales in China have been affected by a boycott among Chinese consumers of Western brands, and the company is still recovering from the impact early last year. Despite being its biggest market, Nike has prioritized North America over China during the pandemic when supplies have been tight.

In the third quarter, Nike reported a 9% increase in sales in North America, while sales in Greater China, its third-largest market after Europe, Middle East and Africa, decreased by 5% compared to the previous year.

Nike anticipates sales growth of mid-single-digits for its current fiscal year, while analysts had predicted a revenue increase of 5.3% based on Refinitiv data.

In its fiscal third quarter, Nike exceeded analysts' expectations, as surveyed by Refinitiv.

• Earnings per share: 87 cents vs. 71 cents expected
• Revenue: $10.87 billion vs. $10.59 billion expected

Nike's net income for the three-month period ended Feb. 28 was $1.4 billion, or 87 cents per share, which exceeded the profit estimates of 71 cents a share, according to Refinitiv data.

Sales increased by 5% to $10.87 billion from $10.36 billion the previous year, surpassing analysts' predictions of $10.59 billion.

Nike's ability to operate in a volatile environment was demonstrated by the better-than-expected results, CEO John Donahoe stated in a press release. He also mentioned that marketplace demand continues to exceed the available inventory supply.

The analysts were informed by a friend that Nike's revenue growth during the holiday season could have been stronger if the company had sufficient merchandise in stock to meet customer demand. The friend stated that all of Nike's factories in Vietnam are now operational after being shut down due to the pandemic, which slowed down manufacturing.

Despite the increase in transportation times, particularly in North America, Nike has accelerated its buying timelines to ensure sufficient product availability on shelves for the fall season.

Nike's inventories on its balance sheet totaled $7.7 billion as of Feb. 28, up 15% from the prior-year period, due to supply chain disruptions that have prolonged transit times. However, the company said that the increased inventory levels were partially offset by strong consumer demand.

Nike's gross margins rose slightly to 46.6% from 45.6% the previous year due to an increase in full-price sales.

Recently, Nike has been moving away from selling to wholesalers and more towards direct sales to consumers. For instance, Nike recently announced that it would lose a portion of its merchandise sales in the near future. In response, Nike has been heavily investing in its website and flagship stores to increase sales.

Nike's Foot Locker will continue to be a significant partner for the company, with a specific focus on basketball and kids, as Donahoe stated on Monday evening.

Nike announced that it had completed informing its wholesale partners about the "big account pivots."

In the third quarter, Nike's wholesale revenue decreased by 1%, while its store sales increased by 14% year over year, as shopper traffic "normalized," the company stated.

In the most recent quarter, Nike's digital sales increased by 19% compared to the previous year, driven by a 33% rise in North America. During the earnings call, Donahoe announced that Nike will continue to expand its presence in the digital metaverse through its partnership with and its acquisition of RTFKT.

Nike shares have experienced a 22% decline as of Monday's market close this year.

Find the full earnings press release from Nike here.