Nike’s earnings showed that the consumer slowdown will not derail all retailers

If there is an impending slowdown in consumer consumption heading into the end of 2023, the world’s largest sports retailer is not seeing signs of it.

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

Nike’s sales fell nearly 2% in the United States, and its overall sales beat Wall Street estimates for the first time in nearly two years. But after reporting fiscal first-quarter earnings, Nike executives made little mention of any demand concerns and said they expected sales to grow during the crucial holiday season.

Barclays’ chief consumer discretionary analyst, Adrian Yeh, called the report a “relief” because it challenged the growing narrative that Nike may be stuck in growing macro headwinds that many believe will slow consumer spending in the fourth quarter of 2023. The giant company reflected some Its losses in 2023 were driven by the news, rising more than 6% on Friday. Nike stock is down nearly 20% for the year.

“When we see a consumer downturn, we often see a dollar crunch, so people start getting rid of their second, third or maybe fourth favorite brand,” Yeh said. “But their favorite brand they continue to spend on. I think that’s what you’re seeing with the power of Nike being the number one brand locally and globally.”

Student loan payments are scheduled to resume in October, and some large retailers who sell multiple brands have noted that will likely hurt sales at their businesses.

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“There are some headwinds coming, especially with [student loans]When the loan forgiveness period expires, Macy’s (M) CEO Jeff Gennette said on Aug. 22, Submit a stock dip On concerns about consumer health during the rest of the year.

Nike, which largely sells a selection of athletic apparel, didn’t mention student loans once. In China, where economic growth has been slower than many including Nike had expected, CEO John Donahue noted that the retailer feels it can withstand fears of declining demand and new competition.

“Sports are back in China, and you can feel it,” Donahue said. “This gives us great confidence about the future and the Chinese consumer in our category regardless of the macroeconomic outlook there.”

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

Nike doesn’t see that problem yet either.

“During the back-to-school period, we outperformed the industry,” said Nike’s CFO friend. “And when you look at our performance during the quarter, we saw momentum build throughout the quarter as back-to-school approached. So, we were encouraged by what we saw from a consumer perspective.”

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

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

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