Nike has warned its profits will continue to be weighed down by the strong dollar and rebates aimed at reducing inventory levels.
The sportswear giant, which generates more than half of its sales outside North America, doubled down on its estimate that the rising dollar will boost its annual sales to $4bn (£3.6bn).
Meanwhile, the company’s inventories rose more than 40% year over year.
Following the announcement, Nike shares fell more than 9% in extended trading.
“Forex headwinds have shifted significantly over the past 90 days as the trend of US dollar strengthening has accelerated,” Nike Chief Financial Officer Matthew Friend said.
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In its quarterly update for investors, the company said that net income fell to $1.5 billion in the three months ended August, down 22% year over year.
The company said profit margins have been hurt by increased transportation costs and higher discounts.
At the same time, total inventories rose 44% to $9.7 billion as the volume of goods in transit increased due to supply chain issues.
However, the company reported that its revenue rose to $12.7 billion over the same period, beating Wall Street forecasts.
Analysts said demand for Nike’s brands, including Jordan and Converse, has slowed as shoppers cut spending amid the cost-of-living crisis.
“Higher inflation is definitely driving up costs, reducing profit margins and discouraging consumers, especially now when they are splashing out on highly discretionary items,” Hianyang Chan of consultancy Euromonitor International told the BBC.
Rival sportswear maker Under Armor and major U.S. retailers like Target have also offered deep discounts as their inventories have risen in recent months.
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