Nike stock rose 3.7 % in premarket trading on Tuesday, as the company's reopening in the United States prompted more consumers to buy its shoes and gear in the three months leading up to November.
Nike's largest market, North America, saw a 12 % increase in sales year over year, countering a 20 % drop in China. Direct sales grew 9% to $4.7 billion, helping the corporation overcome reversals in the world's second-largest economy.
Because its suppliers' plants in Vietnam, a crucial manufacturing base, were closed for long periods owing to the epidemic, China's sales suffered.
In a conference call with analysts, the business said that due to manufacturing closures in Vietnam, it had to cancel the production of around 130 million devices. According to Nike, all plants are now operational, and weekly footwear and apparel output have reached around 80% of pre-closure levels.
Demand was strong, online sales were strong, and supply chain concerns all helped Nike improve its margins by reducing the need for discounting. The gross margin increased by 2.8 % to almost 46%.
Revenue increased 1% to $11.4 billion in the second quarter. The adjusted earnings per share increased by 6% to 83 cents, easily beating expectations.
Despite continued supply chain disruptions due to Vietnam manufacturing closures that may hurt current-quarter sales, Nike reiterated its prediction of roughly 5% sales growth for the year through May. Sales are predicted to climb by less than 5% in the fiscal third quarter, while margins are expected to expand by only 1.5 percentage points year over year.