Nike sales slip after supply chain woes hit North America
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A Nike store in San Francisco. North American revenue declined 10 per cent, partly because of port congestion and container shortages.
PHOTO: BLOOMBERG
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NEW YORK • Nike's rebound from a pandemic slump suffered a setback in the last quarter, when supply chain problems kept products from reaching North America, its biggest market.
The maker of athletic wear, which posted surprisingly strong growth in the previous quarter, missed Wall Street estimates with its latest results. Sales amounted to US$10.4 billion (S$14 billion) in the third quarter - below analysts' projections of US$11 billion.
Its revenue in Europe was also disappointing, partly because many stores there remain shuttered due to the pandemic.
Nike shares fell as much as 5.7 per cent in late trading on Thursday after the results were released, before rebounding somewhat. The stock had been up 1.2 per cent so far this year.
Recovery has been uneven for Nike around the world. In China, where the virus has largely receded, sales have been robust. They jumped 51 per cent in the quarter ended Feb 28 and beat estimates. North American revenue declined 10 per cent, partly because of port congestion and container shortages.
The shipping problems began in late December, with delays at US West Coast ports 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 per cent as a result.
Even with the sales shortfall, Nike's earnings topped estimates. It posted a profit of 90 US cents a share, compared with a projection of 76 US cents. The company's gross margin was 45.6 per cent, more than a percentage point above the 44.4 per cent estimate.
E-commerce has helped Nike weather the Covid-19 disruption. Digital sales of its Nike brand soared 59 per cent last quarter.
"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 in a statement.
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 to retail partners. But its strategy has had some hiccups.
Nike drew controversy when Bloomberg Businessweek revealed the son of a top executive had a burgeoning footwear resale business. Ms Ann Hebert, Nike's head of North America, left and was replaced by Ms Sarah Mensah, who previously ran the Asia-Pacific and Latin America division.
BLOOMBERG
