Just Beat It

Image source: Thomas Bormans - Unsplash

What's going on?

Nike put its signature swoosh to use earlier this week, as the worlds largest athletic brand crossed reporting better-than-expected results off its remaining tasks for the year.

What does this mean?

Nike had a lot on its plate coming into last quarter, including hefty production delays after a Covid outbreak shut its Vietnamese factories yup, the ones that makes about half of its shoes. That really hurt its Asian sales: in China, for example, Nike brought in 20% less revenue last quarter versus the same time last year.

But dont feel too sympathetic: Nike still managed to get enough goods to the US to meet strong demand, so revenue in North America the companys biggest market grew by 12% last quarter. Mix in that the athletic giant continued to distance itself from discount-happy wholesale partners pushing more sales through its own channels instead and youll see how revenue from direct sales grew by 9% last year. All in, then, overall profit jumped by a better-than-expected 7% last quarter versus last year, and investors sent Nikes shares up 3%.

Why should I care?

The bigger picture: Nikes ticking off the metaverse.
Looks like Nike wants a run at the fast-growing metaverse: the company announced last week that it had bought virtual sneaker company RTFKT. And since digital goods cost a lot less to make than physical ones, this could signal the start of a highly profitable revenue stream for the company and one that isnt affected by supply chain issues either.

Zooming out: Chinas losing pace.
Nikes not the only company seeing lower sales in China: data out last week showed that Chinese retail sales grew by less than expected last month, adding to worries that the worlds second-largest economy is slowing down. But this might help: the countrys central bank cut an important interest rate earlier this week, and since banks use it to price their loans, that could help boost spending and reinvigorate the economy.

Originally posted as part of the Finimize daily email.

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