What’s Going On Here?Nike put its signature swoosh to use earlier this week, as the world’s 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 don’t feel too sympathetic: Nike still managed to get enough goods to the US to meet strong demand, so revenue in North America – the company’s 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 you’ll 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 Nike’s shares up 3%. Why Should I Care?The bigger picture: Nike’s 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 isn’t affected by supply chain issues either.
Zooming out: China’s losing pace.
Nike’s 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 world’s second-largest economy is slowing down. But this might help: the country’s 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. | 
