Nike’s stock plunged around 10% in pre-market trading on Friday following the sneaker giant’s latest earnings report.
The company on Thursday said it had a strong first fiscal quarter despite supply chain problems and declining sales in China. Problems with overstocked inventory levels and the aggressive steps it’s taking to lower them also impacted the shoe and apparel maker.
“As a result, we face a new degree of complexity,” Nike CFO Matthew Friend said in a call with investors.
Friend explained that Nike will look to clear inventory for specific pockets of seasonally late products.
Nike’s inventory in North America alone grew 65% compared to last year.
Nike reported net income for the three-month period ended Aug. 31 fell 22% to $1.5 billion, or 93 cents per share, compared with $1.87 billion, or $1.18 per share, a year earlier. Revenue during the period was up 4% to $12.7 billion, compared with $12.2 billion a year earlier.
“We continue to manage through volatility,” Nike President and CEO John Donahoe said in a statement. Donahoe said the company is still relying on competitive advantages, such as the brand’s strength and deep consumer connections.