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Speaker 1: Nike reported global sales for the prior quarter that beat

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Speaker 1: analysts expectations. Joining us now to discuss this is Punam Goil,

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Speaker 1: senior US e Commerce and retail analyst at Bloomberg Intelligence. Well.

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Speaker 1: Seemingly dominating a lot of news flow out of the

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Speaker 1: earnings was the fact, punum that sales were up seventeen

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Speaker 1: percent and up in in every jurisdiction except for China,

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Speaker 1: and in these kind of recessionary fearing times, I suppose

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Speaker 1: investors really like that story. Is it as simple as that? Yeah,

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Speaker 1: I mean, they definitely delivered on the top line, and

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Speaker 1: if you look at it on an effects neutral basis,

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Speaker 1: even China was up. So overall, very very solid top

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Speaker 1: line numbers here, and even on the margin front, they

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Speaker 1: you know, had markedowns that definitely drove margins down, but

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Speaker 1: they did better than what consensus estimate. It's called for. Really,

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Speaker 1: the only you know, the only concerning area from this

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Speaker 1: release was the inventory levels, which we're still up north,

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Speaker 1: which means that there's going to be marked downs even

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Speaker 1: in the coming fiscal quarter, and that's expected, and you

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Speaker 1: know that's really what we're watching for how they clear inventory.

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Speaker 1: But outside of that, UM strong brand, heat, strong momentum, active,

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Speaker 1: We're still a heavily sought after category and Nike leading

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Speaker 1: its charge there. One China does just stand out in

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Speaker 1: terms of a soul sum at least, but one can

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Speaker 1: understand that people aren't exactly exercising while they've been in lockdown.

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Speaker 1: That's absolutely right. So China, you know, of all the regions,

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Speaker 1: is definitely lagging and continues to so as those lockdowns ease, which, um,

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Speaker 1: you know, we've heard that they are beginning to eat slightly.

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Speaker 1: It's a weight and watch situation when these lockdowns do

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Speaker 1: go away, if they go away. When they go away,

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Speaker 1: I think China still remains a promising area for Nike.

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Speaker 1: It's a big growth category, growth area, growth region with

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Speaker 1: highest profits of the company. You know, China is a

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Speaker 1: very highly profitable region. And um, the consumers there will

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Speaker 1: go out and we'll start working out once they can.

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Speaker 1: So I was kind of musing aloud as I was

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Speaker 1: putting some notes together for our data checks, and I

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Speaker 1: was thinking that Nike and FedEx tell different stories. But

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Speaker 1: in both cases the stocks jumped, and we just talked

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Speaker 1: about how Nike flexed its muscles with really strong sales

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Speaker 1: and that's a company just getting things right. I suppose

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Speaker 1: well FedEx flexed its cost cutting efficiencies with a billion

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Speaker 1: dollars of cost savings and would seem to bode well

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Speaker 1: for two of these kind of big American companies that

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Speaker 1: that people follow. But will Nike focus its energies going forward?

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Speaker 1: Do you think on on cost cutting so that it

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Speaker 1: can kind of win at both ends? Well, I think

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Speaker 1: Nike has to be careful if it does that. Um,

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Speaker 1: we don't want to see costs go down in areas

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Speaker 1: where they have future growth potential and market share gains.

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Speaker 1: For example, in the quarter, you know, they've had um

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Speaker 1: price increases this year and despite that, they saw full

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Speaker 1: price selling do really well across their top products and

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Speaker 1: what we're franchises, so that demand creation expense which continues

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Speaker 1: to rise. I wouldn't want to see them pull back

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Speaker 1: at that, So I think they have to be really

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Speaker 1: careful if I don't think they have the same option

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Speaker 1: to cut back as aggressively, because it would really hinder

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Speaker 1: growth going forward. Tell me something, I mean, how far

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Speaker 1: can we look at Nike as and I mind the

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Speaker 1: pun if you will, as a shop window into the

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Speaker 1: rest of what's going on. In the retail space. I think,

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Speaker 1: you know, each retailer tells a different story because it's

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Speaker 1: the consumer is pulling back a little. We've heard that

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Speaker 1: across the board. The macroeconomic conditions could, um, you know,

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Speaker 1: swing us into a recession and therefore the consumer will

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Speaker 1: pull back. But I think what differentiates Nike from the

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Speaker 1: rest is that it is the leader. It has over

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Speaker 1: forty billion dollars in sales and number one at leisure

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Speaker 1: brand in the world, and it has a lot of

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Speaker 1: innovation and star endorsement, celebrity endorsements that really differentiate or

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Speaker 1: help differentiate its place in the marketplace. Um, not all

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Speaker 1: retailers are doing well. We heard from Adidas and you

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Speaker 1: know there are some struggles there. So, um, it's it's

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Speaker 1: a catch. It's a catch twenty two in terms of

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Speaker 1: how retailers are performing and resonating. So the the extra inventory,

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Speaker 1: you know, part part of that is a comparison with

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Speaker 1: twenty one. But let's not go there because it gets

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Speaker 1: kind of complicated. But uh, can they can they take

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Speaker 1: care of it with just volume? I mean can they?

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Speaker 1: You say they after cost cut? I mean they'll have

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Speaker 1: to lower the prices, but they can sell a lot

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Speaker 1: of volume. Absolutely can. If you look at the inventories

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Speaker 1: and you break it down parter over quarter, inventory was

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Speaker 1: actually down UM three on a dollar basis and high

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Speaker 1: single digits on a unit base. This so you can

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Speaker 1: see that the inventories are trending in the right direction.

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Speaker 1: There's just more of it that needs to be done.

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Speaker 1: And the only piece that I'm watching for, which could

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Speaker 1: you know be a red flag is where they clear it. Okay, yeah,

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Speaker 1: we'll have to close it there, but that's an interesting question.

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Speaker 1: Punham Goyle, with his senior US e Commerce and Retail

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Speaker 1: analyst at Bloomberg Intelligence are analyst Wing