Can Nike’s earnings help us predict the future of retail?

It’s been a rough couple of years for retail. A pandemic, inflationary fears and geopolitical strife have all played their part in devastating consumer spending. Typically, to assess the state of the retail industry investors have looked to large, global companies.

And they don’t come much bigger than Nike [NKE].

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Is Nike predicting the future?

Nike reported its fiscal third-quarter earnings last night and largely impressed shareholders. Here’s a rundown of some of the key figures.

Earnings per share of $0.87 versus an expected $0.71.

Revenue of $10.87bn against a predicted $10.5bn.

Digital sales growth of 19%, driven by 33% growth in North America.

More importantly, Nike’s performance could be indicative of wider trends for global retail.

According to CEO John Donahoe, “marketplace demand continues to significantly exceed available inventory supply”. Consumers are certainly willing to spend, but supply chain woes are still a considerable headwind.

If it’s affecting Nike, it’s more than likely affecting other retailers too.

Transport remains a pressing factor also, with North America in particular suffering from slow transit times. Retailers will now have to plan even further ahead to be ready for busy periods. Companies that can’t afford to do this could end up losing out.

Finally, investors should pay careful attention to Nike’s digital performance. 19% year-over-year growth — with 33% growth in North America specifically — could be evidence of a shift in consumer behaviour following the pandemic. Brick-and-mortar stores are open, but consumers continue to utilise the convenience of online shopping.

This could bode well for ecommerce facilitators like Shopify [SHOP], while also rewarding companies like Nike or Amazon [AMZN] that have made tremendous efforts to continue growing their digital offerings.

The retail industry is constantly changing, but by taking a look at companies like Nike, we may be able to catch a glimpse at the future.


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