Business

Nike misses sales estimates as holidays, supply chain crunch loom

September 24, 2021 10:13 am

[Source: Reuters]

Nike Inc (NKE.N) missed estimates for quarterly revenue on Thursday, signaling weaker-than-expected demand as it struggles with a supply chain crunch in Vietnam ahead of the crucial holiday shopping season.

The Beaverton, Oregon-based company’s shares, which are down about 9% from their record high hit in August, initially fell 3% in extended trading before paring back to 1.5% lower.

Months long factory closures in Vietnam, where about half of all Nike footwear is manufactured, have piled more pressure on global supply chains, which are already reeling under the impact of the pandemic, with some analysts predicting that Nike will be short of products during the crucial holiday shopping season.

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Brokerage BTIG this month downgraded Nike’s stock, saying “the risk of significant cancellations beginning this holiday and running through at least next spring has risen materially for Nike.”

The company is facing at least two months of “virtually no unit production at its Vietnamese factories which accounted for 51% of footwear and 30% of apparel units (43% of total units) last year,” BTIG analysts wrote in a note.

Nike did not address its supply chain issues in Vietnam in its earnings statement but did nod to higher product expenses primarily due to increased freight costs.