Nike’s Profitability Crisis: Behind the Superficial Recovery

At first glance, Nike’s recent quarterly performance appeared robust, with the company surpassing analyst expectations for both revenue and profit. However, a deeper examination reveals a troubling erosion of profitability that’s causing growing concern among investors. The athletic apparel giant is facing fundamental challenges that undermine its apparent success.

North America presents a deceptive picture of health. While the region posted a 4% revenue increase, this growth stems entirely from low-margin wholesale channels, which expanded by 7%. Meanwhile, the highly profitable direct-to-consumer segment witnessed a 4% contraction, with e-commerce suffering an even steeper decline. This represents a clear shift toward quantity over quality in sales channels.

The situation in Greater China remains particularly troubling. Revenue plummeted by 9% as both... Read more...