Nike Down After Revenue Miss, Supply Chain Issues
By Michael Dabaie
Nike Inc. shares were down 7% at $148.44 Friday after the maker
of athletic footwear, apparel and accessories reported
first-quarter revenue below analyst expectations.
The company after the bell Thursday reported first-quarter
revenue rose 16% to $12.2 billion, below FactSet consensus for
$12.5 billion. Earnings per share of $1.16 beat FactSet consensus
Chief Financial Officer Matthew Friend said in the Nike's
earnings conference call that "first-quarter financial results
would have been even stronger if not for supply chain congestion
resulting in lack of available supply. Despite these headwinds,
retail sales still grew double-digits versus the prior year,
including a record-setting back-to-school season in North
"Consumer demand for Nike remains at an all-time high, and we
are confident that our deep consumer connections and brand momentum
will continue. However, we are not immune to the global supply
chain headwinds that are challenging the manufacture and movement
of product around the world," Mr. Friend said. "Previously, I had
shared that we were planning for transit times to remain elevated
for the balance of fiscal 2022. Unfortunately, the situation
deteriorated even further in the first quarter with North America
and EMEA seeing increases in transit times due primarily to port
and rail congestion and labor shortages."
Mr. Friend said the company now expects fiscal 2022 revenue to
grow mid-single-digits on year, versus prior guidance of
low-double-digit growth, due solely to the supply chain
"For the balance of fiscal 2022, we expect strong marketplace
demand to exceed available supply. We are optimistic inventory
supply availability will improve heading into fiscal 2023 against
the backdrop of a very strong brand and healthy pull market across
all geographies," the CFO said in the conference call.
J.P. Morgan said in a note it sees Nike's brand momentum across
geographies as sustainable and providing insulation to macro
volatility and supporting at minimum sustainable, multi-year,
high-single-digit top-line growth. "We view this, combined with
continued gross margin expansion...driving at least multi-year
mid-teens sustainable EPS growth," J.P. Morgan said. The firm rates
Nike at Overweight.
"Demand indicators remain strong though, as anticipated, Nike
cut FY22 guidance due to production dislocation. Issues are
transient and rebalancing supply to meet demand is likely in early
FY23, suggesting both opportunity from channel replenishment and a
return to the prior expected earning trajectory," Stifel said in a
Stifel said it views Nike as a top-tier core holding for large
cap growth investors and recommends using any weakness in shares in
response to supply challenges as an opportunity to build positions.
The firm rates Nike at Buy.
Write to Michael Dabaie at firstname.lastname@example.org
(END) Dow Jones Newswires
September 24, 2021 11:56 ET (15:56 GMT)
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