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Nike Gets Tripped Up by Shipping Woes

Don’t hit the panic button just yet.
(ricochet64)
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“Nike Inc. joined a growing list of U.S. companies getting squeezed by global supply-chain disruptions stemming from the Covid-19 pandemic,” WSJ writes.

Why It Matters: It’s a tough beat for Nike, but a common one in the pandemic world. The company said, “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.” However, Nike isn’t panicking and said it expects to recover in the current quarter.

Numbers To Consider:

  1. Nike posted quarterly revenue of $10.36 billion, a 2.5% rise from the year-ago period.
  2. “On a constant-currency basis, North American revenue declined 11%, while revenue in Greater China grew 42%. Nike shares fell about 3% after hours.”
  3. Direct sales for Nike improved by 20% to $4 billion and digital revenue jumped up 59%, hitting revenues of $1 billion in North America for the first time.
  4. Quarterly earnings were $1.45 billion, an improvement from $847 million the year before.

A Look Back: “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. Before the pandemic hit, the sportswear giant had been beefing up its direct-to-consumer business through its own website and stores.”

  • Nike, which parted ways with Amazon in 2019 and has downsized its brick-and-mortar operation, has taken steps to embrace the digital, direct-to-consumer future.

The Takeaway: Nike’s business looks nicely situated, but will ultimately rely on quelling the pandemic in order to fully recover.

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