Nike Says Shipping Problems Constrained Revenue Growth -- 2nd Update
March 18 2021 - 6:50PM
Dow Jones News
By Khadeeja Safdar and Kimberly Chin
Nike Inc. joined a growing list of U.S. companies getting
squeezed by global supply-chain disruptions stemming from the
Covid-19 pandemic.
The sneaker giant on Thursday reported quarterly revenue that
was below analysts' expectations, saying sales were hindered by a
global container shortage and congestion at West Coast ports that
delayed the flow of inventory by more than three weeks. The company
said it expects to capture the missed revenue in the current
quarter.
"While we are optimistic about the pace of vaccine distribution
and how this will enable safe reopening of the global economy in
the near future, the effects of the virus continue to create
short-term volatility in our business performance," finance chief
Matthew Friend said on the company's earnings call.
Nike's fiscal third-quarter revenue was $10.36 billion, a 2.5%
increase from a year earlier. On a constant-currency basis, North
American revenue declined 11%, while revenue in Greater China grew
42%
Nike shares fell about 3% after hours.
Supply-chain issues have hit makers of everything from cars and
clothing to fitness equipment and medical needle containers, as
port backlogs and weather disruptions have complicated meeting
strong consumer demand driven by the pandemic.
Nike said its direct sales, which rose 20% to $4 billion in the
quarter, somewhat offset the shipping problems. Meanwhile, digital
revenue increased 59%, with the company saying digital revenue in
North America hit $1 billion for the first time.
In the early months of the pandemic, Nike closed stores and
continued to pay its workers, but doubled down on digital sales as
consumers were confined to their homes. On Thursday, the company
said it is still experiencing the impact of the virus from
safety-related measures and lockdowns in some regions.
Before the pandemic hit, the sportswear giant had been beefing
up its direct-to-consumer business through its own website and
stores.
In 2019, it parted ways with Amazon.com Inc. and cut back on the
number of stores selling its goods. It also had been investing in
apps for shopping, selling sneakers and guided workouts.
For the fiscal third quarter, which ended Feb. 28, Nike had
earnings of $1.45 billion, or 90 cents a share, compared with $847
million, or 53 cents a share, a year earlier.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Kimberly
Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
March 18, 2021 18:35 ET (22:35 GMT)
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