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However, Nike pointed out its annual profits sank 16% to $5bn on the back of increased costs during the period, including the cost of sales, overhead expenses and total selling and administrative expenses.

Gross margin stood at 43.5% compared with 46% a year earlier.

Despite this, CEO John Donahoe remained upbeat that the group’s strategy “is working.”

Donahoe continued: “FY23 was a milestone year for NIKE as our unique advantages continue to drive competitive separation. Our investment in innovation and our digital leadership are fueling broad-based growth across our portfolio of brands, as we create value by serving the future of sport.”

Matthew Friend, EVP and CFO, added: “FY23 demonstrated the power of Nike’s portfolio to fuel strong growth, year after year. We finished the year with mid-teens currency-neutral revenue growth and a healthy marketplace — setting the foundation for sustainable, profitable growth in FY24 and beyond.”

Knowing the customer

Elaborating on an analyst call in the wake of the numbers announcement, Donahoe said: “We know our consumers better and are better able to serve them, with data-driven insights fueling our end-to-end value chain, including product creation, marketing, and merchandising. This is translating into sustainable and profitable growth for Nike, and we believe this growth will only accelerate as we add new capabilities built to serve consumers at scale.

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“Today, in the industry, with digital and physical growth converging, we’ve accelerated investment to create a truly distinctive digital experience through our own platforms. Our investment in innovation and our digital leadership are fueling broad-based growth across our portfolio of brands, as we create value by serving the future of sport.”

He also weighed in on the brand’s commitment to China, noting consumer growth there is picking up momentum “in a bigger way than other places”. Gen Z, he said, is the most active generation, including the growing middle class with an increased focus on health and wellness which overall makes Nike confident about its brands and business in the East Asian country.

“We’ll continue to invest in China. Our China for China strategy, I think, is going very, very well. And looking ahead, we’re optimistic about Nike’s brand, Jordan’s brand, the momentum we have.”

In September last year, Nike’s board of directors voted against a shareholder proposal to halt its sourcing of goods and raw materials from China as concerns surrounding human rights violations in Xinjiang continue to mount.

While a year earlier, a Nike boycott led by Chinese consumers reportedly cost the brand market share after Nike had issued a position statement on the Xinjiang situation.

Nike Q4 results in brief – costs offset revenue growth

  • Total revenue grew 5% to $12.83bn compared to the prior year and was up 8% on a currency-neutral basis.
  • Gross profit increased by 2% to $5.6bn as opposed to $5.5bn previously.
  • Gross margin decreased 140 basis points to 43.6%.
  • Net income was down 28% to $1.03bn in comparison to $1.43 last year.

Commenting on the factors driving fourth-quarter results, Friend said: “In Q4, we saw another quarter of strong consumer demand, with traffic growing online and in our stores and total retail sales across the marketplace up double digits versus the prior year. Beyond driving strong top-line growth, we finished the year with a significantly improved marketplace position, with total marketplace inventory units, including Nike and our wholesale partners, down year over year.

“Throughout the year, we drove competitive separation by doing what Nike does best: serve athletes with product innovation and rich storytelling, amplify our brand voice through key sport and consumer moments, deepen consumer connections across our portfolio, and actively manage the marketplace to drive sustainable profitable growth.”

He also pointed out that the distinction with the first half is that Nike was continuing to manage marketplace inventory and managing marketplace health.

In its third-quarter trading update earlier in March, Nike forecasted ending fiscal 2023 with healthier inventory levels but warned margins may be hit as it was looking to offer steeper discounts to get rid of excess stock.