Ghost Global (Nike | FedEx | Bed, Bath & Beyond | H&M | BlackBerry)

Ghost Global is a new weekly segment that will be brought to you by the Ghost Grads on a rotational basis. This week, Kreeti Panday updates us on earnings from some significant US companies.

Nike: direct-to-consumer is working

Nike has released results for the year ended March 2022, celebrating the group’s 50^th anniversary.

Revenue has dropped 1% in the fourth quarter, largely blamed on macroeconomic challenges. The recent Covid-19 lockdown has caused difficulty for the company, with sales in Greater China dropping by 19% compared to the previous year’s period.  Supply chain disruptions caused a rise in Nike-owned inventories of 30% compared to the prior year, as well as a 12% decline in wholesale revenue.

Despite this, Nike is still optimistic on the strength of its brand as a driver for consumer demand. Nike claims to be the no. 1 brand for athletes and sport in the 12 key cities around the world, specifically citing the fact that the Jordan brand has surpassed $5 billion in revenue.

Their Consumer Direct Acceleration strategy has also been kicking in. This is a strategy focused on direct consumer relationships i.e. owning the customer experience rather than selling through third-party retailers. Direct revenues were up 14% and the number of Nike-owned stores was up 10%. Nike has put a lot of emphasis on their effort to become more digitally connected with Nike Digital now comprising 24% of total brand revenue. The company believes that their increasing digital engagement, including Nike app downloads, is leading to more repeat buyers and higher buying frequency which will ensure long-term growth.

However, high inflation levels have led to concerns of lower consumer demand in favour of cheaper alternatives.

FedEx reports highest ever annual revenue

FedEx has closed its financial year ended March 2022 with highest ever revenue of $93.5 billion, an 11% increase from last year.

The really impressive thing is that operating margin managed to expand in the fourth quarter, despite challenges caused by labour shortages as well as external factors including Covid-19 lockdowns in Asia and geopolitical uncertainties in Europe.

FedEx is currently readying the company for a leadership transition, with Don Colleran moving into a CEO advisor role in September before his retirement in December after a 40-year tenure at FedEx. He will be replaced by Richard Smith, who has held numerous positions at FedEx since joining in 2005, including the position of CEO of FedEx Logistics.

FedEx has expressed concerns of slower inventory restocking leading to lower freight demand. The group also expects lower B2C (Business-to-consumer) volumes as consumers take any opportunity to leave their houses and venture into stores in the absence of Covid-19 restrictions.

Bed, Bath & Beyond a disaster

Bed, Bath & Beyond has released Q1 2022 results during a year in which many investors have pulled the plug. The share price is down over 65% this year and expectations for results were neither high nor were they met.

Revenue fell from $1.95 billion in Q1’21 to $1.46 billion in Q1’22, less than the expected $1.51 billion. The group also struggled with supply chain issues, with a 15% increase in inventory compared to the previous year. The turnaround strategy includes aggressive actions on costs and reduced capital expenditure. However, the outlook is stark as comparable sales continue to trend in the range of negative 20%.

The company announced a change in CEO from Mark Tritton to Sue Gove, previously an Independent Director and Chair of the Strategy Committee, as well as a change in the Chief Merchandising Officer position.

Hennes & Mauritz – you know the brand, you just don’t realise it

H&M probably rings a bell, doesn’t it? The Swedish retailer released results for the first six months of the financial year with sales in physical stores experiencing a steady increase in the second quarter. Majority-owned Sellpy (an ecommerce platform for second hand sales) has doubled sales in the last quarter.

The Russia-Ukraine war has caused a halt in sales in Russia, Belarus and Ukraine, which explains 500 basis points of the expected 6% decrease in sales for June. Rising inflation rates are also a cause of concern for H&M, as sales have also not yet reached pre-pandemic levels.

H&M has implemented a sustainability-focused strategy, aiming to halve carbon emissions while doubling sales by 2030.

BlackBerry is still out there, even if BBM isn’t

Canadian group BlackBerry (now primarily a cybersecurity company for anyone having flashbacks of typing their BBM messages with the edge of their fingernails) reported a gross margin of 62% in Q1 results. The company achieved a 19% increase in revenue from IoT (Internet of Things).

The type of work in this space includes designing a Digital Cockpit for the new Renault Jiangling, an electric sedan. This Digital Cockpit will make use of augmented reality, artificial intelligence, and hologram functions. BlackBerry expects growth of 8 – 12% in this area over the next three years.

BlackBerry achieved a 6% increase in revenue from cybersecurity. Developments in this space include joining forces with Google to create Chrome Enterprise Management. This will aid the growing number of devices running Google Chrome OS and Chrome browser. BlackBerry also develop software products and provide professional services.

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