A GlobalData analyst said Nike’s sales continue to be dragged down by its home market of the US where sales dipped 3.5%. Credit: Photograph by Bing Guan/Bloomberg via Getty Images

NIKE Inc made the announcement as it revealed its second quarter financial results, the most standout number being 0.5% sales growth to $13.3bn.

Nike Inc says areas of potential savings include simplifying its product assortment increasing automation and use of technology, streamlining its organisation, and leveraging its scale to drive greater efficiency.

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A majority of these savings will be invested to fuel future growth, accelerate innovation at speed and scale, and drive greater long-term profitability.

Q2 results in brief

Nike’s second-quarter revenues were up 1% to $13.39bn compared to the previous year’s $13.31 and decreased 1% on a currency-neutral basis.

The brand highlighted that currency-neutral growth in APLA and Greater China was offset by declines in North America and EMEA regions.

Direct revenues were $5.7bn, up 4% currency neutral and 6% reported, while brand digital sales increased by 1%, on a currency-neutral basis.

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Wholesale revenues decreased 3% on a currency-neutral basis to $7.1bn.

Net income increased from $1.33bn to $1.58bn, an increase of 19% compared to the same period last year.

John Donahoe, president & CEO of Nike Inc, said Q2 results demonstrated how Nike is getting back on its front foot in key areas of innovation and growth, adding that this quarter showed strong execution by their team as Nike focuses on winning formula of innovative product, distinctive storytelling and differentiated marketplace experiences.

What the analysts say

GlobalData analyst Louise Deglise-Favre believes the consumer confidence is yet to recover in a climate of macroeconomic difficulties with Nike’s sales continuing to be dragged down by its home market of the US where sales dipped 3.5%

However, she pointed out that in contrast, Nike performed well in emerging markets, with the Greater China region rising 4.1% and the Asia-Pacific & Latin America region growing 12.8%.

The executive vice president & chief financial officer of Nike Inc, Matthew Friend pointed out that looking ahead Nike expects a softer outlook for the second-half and the brand will remain focused on “strong gross margin execution” and “disciplined cost management.”

In September, Nike reported just 2% growth as inflationary pressure hits sportswear sales with an industry expert stating that “even the best sportswear brands are vulnerable in a highly inflationary market”.

Recently, GlobalData noted that Nike’s market value tanked by 19.2% which resulted in the sportswear giant losing over $32bn in market value during the third quarter.

“This was impacted by weak Q3 earnings and a gloomy Q4 outlook, as well as the slow-recovering Chinese footwear segment, also its second major market,” observed GlobalData.