Despite the lower-than-expected profit performance, Nike's performance in the Greater China region continues to shine.
After the U.S. stock market closed on Thursday, Nike released its financial results for the fourth quarter and full fiscal year of 2023. The report showed that Nike's fourth-quarter revenue was $12.83 billion, exceeding analysts' expectations of $12.59 billion, with a year-on-year growth of 5%. This marks the seventh consecutive quarter that the company's revenue has exceeded expectations.
However, Nike's net profit for the fourth quarter was $1.03 billion, lower than the $1.44 billion in the same period last year. Earnings per share were $0.66, also lower than the $0.90 in the same period last year and the Wall Street expectation of $0.67. This is the first time in three years that the company's profit has fallen short of market expectations. This reflects that Nike is still struggling to sell its large inventory of goods, which has eroded its profit margin.
Nike has been discounting excess inventory, which has put pressure on profit margins. Compared to the same period last year, Nike's inventory has slightly increased this quarter. The company attributes the decline in profit to rising product input costs, increased freight and logistics expenses, increased promotional activities, and unfavorable currency exchange rates.
Affected by the lower-than-expected profit, Nike's stock price fell by 4.45% after the U.S. stock market closed, and it has fallen by a cumulative 3.1% so far this year.
It is worth noting that Nike's performance in the Greater China region is very impressive, which is an important growth market for Nike. Nike's revenue in Greater China in the fourth quarter was $1.81 billion, exceeding analysts' expectations of $1.64 billion, achieving three consecutive quarters of positive growth, and a 25% increase compared to the same period last year.
In terms of annual performance, Nike's revenue for the fiscal year 2023 was $51.2 billion, a 16% increase compared to the same period last year, and revenue in the Greater China region was $7.248 billion, a 4% increase year-on-year.
In addition, Nike's CFO Matthew Friend stated during the conference call that it is expected that Nike's revenue in the fiscal year 2024 will grow at a mid-single-digit rate driven by its direct-to-consumer business. Bloomberg reported that analysts expect a growth rate of 6%.
Neil Saunders, an analyst at GlobalData Retail, stated in a report:
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Overall, Nike is a brand that has shown stable performance and has not faced any survival crisis. However, it is not in a leading position and has to accept the situation of rebooting, downsizing, and redefining its business approach in the coming year.
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Financial report shows that Nike's Greater China revenue in the fourth quarter reached $1.81 billion, surpassing analysts' expectations of $1.64 billion. It achieved three consecutive quarters of positive growth, with a YoY increase of 25% compared to the same period last year.

China's business performance is impressive, Nike's financial report is "encouraging".