NKE Nike Inc

By Michael Dabaie

Nike Inc. shares fell 4% to $137.08 Friday in morning trading.

The athletic footwear, apparel, equipment and accessories company Thursday reported third quarter revenue rose 2.5% to $10.36 billion, missing the FactSet consensus for $11 billion.

Per-share earnings were 90 cents, up from 53 cents the same period last year.

North America reported revenue fell 10% on supply chain challenges, including global container shortages and U.S. port congestion, impacting the flow of inventory and timing of wholesale shipments, the company said.

Europe, Middle East and Africa physical retail sales declined, with 45% of Nike-owned stores experienced mandatory Covid-19 related closures for the last two months of the quarter, partially offset by a 60% bump in digital sales.

The company said that about 65% of stores in EMEA are open or operating on reduced hours.

Greater China revenue increased 42% on a currency-neutral basis, reflecting double-digit growth versus the year-earlier quarter, Nike said.

"We can see the near-term operating environment with increasing clarity, yet we remain focused on what's required to win for the long term. With that in mind, we are now more confident in our full year outlook for revenue and expect low- to mid-teens growth versus the prior year," Chief Financial Officer Matt Friend said on the company's conference call. "Specifically for Q4, in our least comparable quarter of this fiscal year, we expect revenue growth of roughly 75% versus the prior year. This reflects government-mandated restrictions in Europe starting to ease in April and inventory transit times slowly improving in North America."

"Looking ahead to fiscal 2022...we are already exceeding our pre-pandemic levels of business, and I expect the momentum we are seeing to translate into continued strong revenue growth," Mr. Friend said.

Bank of America Global Research said in an analyst note it expects Nike "to recapture demand in [the fourth quarter] given transit times are slowly improving in N. America and we believe Nike should have sufficient supply to meet the potential surge in demand from fiscal stimulus."

Bank of America said it believes Nike continues to benefit from a strong product led by classic footwear franchises including Air Force 1 and Air Jordan 1 and more recently Nike Blazer and Nike Dunk. "We believe Nike's current product momentum is supported by its return to a dominant position in the resale market," Bank of America said. The firm reiterated its Buy rating on the stock.

"We encourage investors to focus on indicators of a strong pull market...and look through transient supply-side challenges," Stifel said in a note. Stifel said it sees the third-quarter revenue miss as a push to the fourth quarter and expects product flow to be normalized by fiscal year-end.

Stifel rates the stock as Buy.

Write to Michael Dabaie at michael.dabaie@wsj.com

(END) Dow Jones Newswires

March 19, 2021 11:07 ET (15:07 GMT)

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