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Pandemic And Shipping Issues Hits Nike’s Sale As Its Misses Estimates

Pandemic And Shipping Issues Hits Nike’s Sale As Its Misses Estimates
Shipping issues during the Covid-19 pandemic and the slump in sales at its brick-and-mortar stores because of the various restrictions imposed for the pandemic last year drove Nike Inc to miss its quarterly sales estimates. There was also disappointment among investors about the revenue forecast for its revenues for the current year by the biggest athletic shoe maker of the world.
The fill year revenue growth as forecast by Nike was in "low-to-mid-teens" which was short of the 15.9 per cent growth in sales as w3as predicted by analysts according to IBES data from Refinitiv.
This announcement resulted in a 3 per cent slump in the company’s share price.
"I think the expectations for Nike into the call were very high with many analysts upping revenue and earnings expectations into the quarter," said Ivan Feinseth, head of investment at Nike shareholder Tigress Financial Partners.
During the latest completed quarter, the revenues of the company increase to $10.36 billion from $10.1 billion while analysts on the average gad predicted revenues of $11.02 billion. There was 11 per cent drop revenue from North America on a currency neutral basis due to shortages in containers and the congestion at US ports which resulted in build up of inventories of about more than three weeks, the company said.
"We expect to capture this delayed revenue in the fourth quarter," Nike Chief Financial Officer Matthew Friend said.
With fresh outbreaks of Covid-19 among dockworkers and strict safety restrictions imposed with the aim of curbing the spread of the novel coronavirus has in recent months led to a slow down in container traffic at US ports. On the other hand, there has also been a surge in cargo at the ports because of demand for bulk products from customers due to the pandemic.
Despite this however the net income of Nike rise to reach $1.45 billion, or 90 cents per share, in the third quarter ended February 28, compared to $847 million, or 53 cents per share, for the same period in the previous year. Analysts were expecting earnings per share of 76 cents.
For the last two months of the quarter, 45 per cent of the Nike owned stores were forced to be closed down due to the pandemic in the last two months of the quarter in Europe, the Middle East and the Africa region, the company said. Only 65 per cent of the stores of the company are currently open in the EMEA region but are operating on reduced hours, the company said.
In contrast, Nike’s rival Adidas said last week that it had managed to reopen about 95 per cent of tits stores after the pandemic induced lockdowns. 

Christopher J. Mitchell

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