Nike shares slide as Covid recovery stutters
Analysts remain upbeat on Nike's outlook despite a tough quarter.
Nike shares fell the most since October after its pandemic rebound suffered a setback in the last quarter, when supply-chain problems kept products from reaching North America, its biggest market.
The sportswear giant, which posted surprisingly strong growth in the previous quarter, missed estimates with its latest results. Sales amounted to $10.4bn (€8.7bn) in its third quarter – far below analysts’ projections of $11bn.
Its revenue in Europe also was disappointing, partly because many stores remain closed due to the pandemic.
Nike shares fell as much as 4.4% to $137 in New York trading after the Thursday post-close results release. The stock had been up 1.2% this year through the close.
The recovery has been uneven for Nike around the world.
In China, where the virus has largely receded, sales have been robust: They jumped 51% in the quarter ended February 28 and beat estimates. North American revenue declined 10%, partly because of port congestion and container shortages.
The shipping problems began in late December, with delays at US ports on the west coast adding three weeks to transportation times, executives said.
That led to late shipments and a lack of supply for wholesalers. Inventory at Nike’s distribution centres fell 20% with so much product stuck en route.
Even with the sales shortfall, Nike’s earnings topped estimates.
The company posted a profit of 90c a share, compared with a projection of 76c.
E-commerce has helped Nike weather the disruption from Covid-19.
Digital sales of its Nike brand soared 59% last quarter, the company said, citing strong growth in every region.
“We continue to see the value of a more direct, digitally enabled strategy, fuelling even greater potential for Nike over the long term,” chief financial officer Matt Friend said.
“Nike could achieve management’s guidance of 75% sales growth in its fiscal fourth quarter, surpassing consensus’ 65% gain, as the company captures missed sales from third quarter supply constraints and increases share via innovation and sports,” said Bloomberg retail analyst Poonam Goyal.
Pandemic-fuelled lockdowns have boosted e-commerce orders for many brands, but Nike has been especially aggressive in shifting sales to online channels and its company-owned stores – rather than the retail partners it has used for decades.
• Bloomberg
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