Nike Inc. (NKE) – Get the Class B report from NIKE, Inc. Shares fell in premarket trading on Friday after the world’s biggest sportswear company warned that supply chain disruptions, in Asia and elsewhere, would likely impact its holiday sales forecast. .
Nike, in fact, cut its full-year sales forecast to a “mid-single-digit” growth rate, from a previous estimate of double-digit gains, due to supply chain issues that , she said, were affecting the movement of goods from Asia to North America.
“Consumer demand for Nike remains at an all-time high and we are confident that our deep consumer relationships and brand momentum will continue,” Chief Financial Officer Matthew Friend told investors on a conference call Thursday. evening. “However, we are not immune to global supply chain headwinds that test the manufacturer and the flow of products around the world.”
“Specifically for the second quarter, we expect revenue growth to be flat or lower single digits year over year as plant closures impacted production and holiday and spring delivery,” he added. “The lost weeks of production combined with longer transit times will lead to short-term inventory shortages in the market over the next several quarters.”
Shares of Nike fell 6.5% in early trading on Friday to change hands at $148.97 apiece, a move that would trim the stock’s six-month gain to around 12%.
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Nike said earnings for the three months ending August, its fiscal first quarter, were pegged at $1.16 per share, up 22.1% from the same period last year and just before the Street consensus forecast of $1.11 per share. Group revenue, Nike said, rose 16% to $12.2 billion, just below analysts’ estimates of $12.465 billion.
Sales in China rose 11% from a year ago to $1.982 billion, Nike said, while sales in North America, Nike’s biggest market, rose 15% to $4.879 billion.
Gross profit margins increased 170 basis points to 46.5%, “driven by margin expansion in our NIKE Direct business, a higher combination of full-price sales and favorable exchange rate movements” .
Over the summer, two Nike suppliers in Vietnam, where about half of its shoes and a third of its apparel are produced, planned production cuts to meet COVID demands amid a surge in Delta infections. in the South Asian region.
“Several of our partner factories in Vietnam and Indonesia had to abruptly cease operations in the first quarter,” Friend said. “As of today, Indonesia is now fully operational, but in Vietnam almost all shoe factories remain closed by government mandate.”
“Our experience with COVID-related plant closures suggests that reopening and returning to full-scale production will take time,” he added.