Nike beats on-demand revenue estimates in North America

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The Nike swoosh logo is seen outside of the 5th Avenue store in New York, New York, the United States on March 19, 2019. REUTERS / Carlo Allegri / File Photo

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Dec.20 (Reuters) – Nike Inc (NKE.N) beat quarterly revenue and profit estimates on Monday, boosted by strong demand for its shoes and athletic wear in North America, and said it was over confident that supply chain issues will be alleviated in its next fiscal year.

The company’s shares rose 3.7% in extended trading.

Nike’s second-quarter sales in North America, its largest market, jumped 12% as the reopening of the U.S. economy and the rollout of vaccines gave people the confidence to return to stores and do so. splurging on sneakers for running and hiking.

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“Nike is doing well to get as much inventory as possible. In the long term, I don’t see the momentum drifting away from the company because the products are highly coveted by consumers,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.

The sportswear maker said its direct-to-consumer business had record Black Friday sales in North America despite supply constraints ahead of the holiday season due to multi-month factory closures in Vietnam, where about half of all Nike shoes are made. Read more

However, these supply issues and new lockdowns related to COVID-19 caused Nike’s revenue in Greater China to drop 20% in the second quarter.

Nike said weekly footwear and clothing production was around 80% of volumes before its now fully-opened factories in Vietnam closed.

The closures have caused Nike to cancel production of around 130 million units, CFO Matt Friend said.

The company’s overall revenue rose 1% to $ 11.36 billion in the second quarter, beating estimates of $ 11.25 billion, according to IBES data from Refinitiv. The company expects a small single-digit increase in sales in the third quarter compared to estimates of a 2.5% increase.

Nike earnings of 83 cents a share topped estimates of 63 cents.

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Uday Sampath report in Bangalore; Editing by Maju Samuel

Our Standards: Thomson Reuters Trust Principles.


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