Nike’s earnings showed a consumer slowdown won’t derail all retailers


If there’s a looming consumer slowdown coming to close out 2023, the world’s largest sports retailer isn’t seeing signs of it.

“We continue to see consumer demand for our brands and for our products to be very, very strong,” Nike (NKE) CFO Matthew Friend said on the company’s earnings call. “The consumer is proving to be resilient.”

Nike sales fell about 2% in the US, and its overall sales missed Wall Street estimates for the first time in about two years. But after reporting first quarter fiscal earnings, Nike executives made little mention of any demand concerns and said it expects sales to grow during the crucial holiday season.

Barclays consumer discretionary senior analyst Adrienne Yih described the report as a “relief,” as it defied a growing narrative that Nike could be caught up in the mounting macro headwinds many believe will slow consumer spending in the fourth quarter of 2023. Shares of the shoe giant reversed some of their 2023 losses on the news, rising over 6% on Friday. Nike stock is down nearly 20% for the year.

“When we see a consumer pullback, oftentimes we see a crunch in dollars, and so people start to kick out their second, third, or maybe their fourth favorite brand,” Yih said. “But their favorite brand they continue to spend at. I think that’s what you’re seeing with the power of Nike being the No. 1 brand both domestically and globally.”

Student loan payments are set to restart in October, and some larger retailers that sell multiple brands have noted that will likely hurt sales at their business.

“There are some headwinds coming, particularly with [student loans], that expiration of the loan forgiveness,” Macy’s (M) CEO Jeff Gennette said on Aug. 22, sending the stock tumbling on concerns over consumer health through the rest of the year.

Nike, which notably sells a more pointed selection of largely athletic wear, didn’t mention student loans once. In China, where economic growth has been slower than many expected including for Nike, CEO John Donahoe noted the retailer feels it can withstand fears of waning demand and new competition.

“Sport is back in China, you can just feel it,” Donahoe said. “That gives us great confidence about the future and the Chinese consumer in our segment regardless of the macroeconomic outlook there.”

Foot Locker (FL) has been warning about a “tough macro backdrop” since May and most recently said a weaker than expected back-to-school shopping season contributed to it slashing full-year sales guidance for the second time in as many quarters.

Nike isn’t seeing that problem yet, either.

“Within back to school, we outperformed the industry,” Nike’s CFO Friend said. “And when you look at our performance over the quarter, we saw momentum building throughout the quarter heading into back to school. And so, we were encouraged by what we were seeing from a consumer perspective.”

PORTLAND, OR - NOVEMBER 24: A Nike basketball is seen on the floor during the Phil Knight Invitational at Moda Center on November 24, 2022 in Portland, Oregon. (Photo by Michael Hickey/Getty Images)

A Nike basketball is seen on the floor during the Phil Knight Invitational at Moda Center on Nov. 24, 2022 in Portland, Ore. (Michael Hickey/.)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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