The Clap
Nike (NYSE: NKE) has beaten analysts’ sales estimates across all regions.
The deets
While we won’t get into the numbers of it, we should take a look at how they beat expectations amidst soaring inflation & supply chain disruptions.
Retail stores have historically looked to wholesale partners (third-party distributors) as a key factor in increasing sales. For example, ten years ago, 72% of Nike’s sales came from wholesale partners, while direct sales amounted to less than 15% of total sales.
Now, Nike’s direct sales, which allows it to sell more products at full price, amount to 42% of total sales. This has helped Nike offset some of the higher costs caused by supply chain disruptions.
Why this matters
Nike has cut wholesale accounts worldwide by over 50%. However, they are still important. In fact, Nike’s management gave a shout-out to Foot Locker (NYSE: FL), which they see as an important partner.
Nike’s stock was down 22% prior to the earnings release due to fears of inflation & supply chain issues. Nike’s Chief Financial Officer said demand “continues to significantly exceed” Nike’s inventory.
