Nike posts mixed results as sales fall short of estimates, hurt by U.S. port congestion

A person walks in entrance of a Nike merchandise exhibit, on February 22, 2021 in New York City.

John Smith | Corbis News | Getty Images

Nike reported Thursday greater third-quarter earnings though sales development was hurt by widespread port congestion within the United States and ongoing retailer closures in Europe.

Although the worldwide well being disaster nonetheless leaves an overhang of uncertainty, Nike stated it anticipates lockdowns will begin to ease in Europe subsequent month, and supply home windows will slowly enhance in North America by way of the rest of the yr.

Its shares have been down greater than 2% in after-hours buying and selling.

Here’s how Nike did in the course of the quarter ended Feb. 28, in contrast with what analysts have been anticipating, based mostly on a survey by Refinitiv:

  • Earnings per share: 90 cents vs. 76 cents anticipated
  • Revenue: $10.36 billion vs. $11.02 billion anticipated

Nike reported web revenue of $1.45 billion, or 90 cents per share, in contrast with $847 million, or 53 cents per share, a yr earlier. That was higher than the 76 cents per share that analysts have been anticipating, based mostly on Refinitiv information.

Total sales rose to $10.36 billion from $10.1 billion a yr earlier. That was decrease than the $11.02 billion forecast by analysts.

In North America, income dropped 10% yr over yr, hurt by cargo delays that Nike stated have been dragging on for greater than three weeks. That additionally meant sales at its wholesale companions have been impacted, as companies such as malls and sporting items shops did not obtain items on time. They’ll probably now have to low cost some of that merchandise to create space on the shelf for extra in-season kinds.

Backlogged West Coast ports, a worldwide container scarcity, and a truck driver scarcity within the U.S. proceed to be complications for companies from Nordstrom to Urban Outfitters to Peloton. Many have stated they count on these points to pull on till the second half of the yr.

In its Europe, Middle East and Africa area, Nike stated sales at its brick-and-mortar retail shops dropped as a consequence of pandemic-related closures and restrictions, whereas digital sales in these markets grew 60% within the newest interval. It stated about 60% of its shops within the area are open right this moment, with some working on diminished hours.

In Greater China, a area that’s additional alongside in recovering from the pandemic, sales climbed 51%.

Nike provided an outlook for the present quarter and financial yr that anticipates stock transit instances will enhance slowly throughout North America from right here, and lockdowns will ease throughout Europe come April.

It’s forecasting fiscal 2021 income to rise by a low-to-mid teenagers proportion from the prior yr. Analysts had been calling for full-year income development of 15.9%, based on Refinitiv.

Fourth-quarter sales are anticipated by the corporate to be up 75% yr over yr, as the corporate laps a interval when 90% of its owned shops have been shut because of the pandemic. Analysts had been on the lookout for development of 64.3%.

Online sales get a lift from livestreaming

Nike’s direct-to-consumer enterprise grew 20% yr over yr, to $four billion. And on-line sales for the Nike model surged 59%, as customers seemed so as to add new sneakers and athletic gear to their wardrobes, even when they have been caught at house. The firm stated it booked $1 billion in sales on-line in North America for the primary time.

“We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term,” Chief Financial Officer Matt Friend stated.

Nike’s e-commerce enterprise continues to be on observe to account for at the very least 50% of sales within the coming years, the corporate stated. Nike has been investing extra in digital, together with its widespread SNKRS app, to achieve youthful customers on-line and cut back its reliance on third-party companions.

It additionally stated it has not too long ago had success testing new livestreaming codecs, which stay extra widespread in Asia than within the U.S. But extra firms, like Nordstrom and Walmart, are experimenting in America, too. During the third quarter, Nike stated it began livestreaming in Japan, Germany and Italy.

“We’re seeing phenomenal engagement for this live interaction, with average viewing doubling,” Chief Executive John Donahoe stated.

Nike shares are up greater than 110% over the previous 12 months, as of Thursday’s market shut. It has a market cap of greater than $225 billion.

Find the complete press launch from Nike right here.

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