This May Be Why Nike’s Sales Fell Short of Estimates in Q3

Sport apparel and shoe retailer Nike posted its third quarter financial results this week and revealed that sales had fallen short of estimates.

According to the company, congested ports in the U.S. as well as ongoing store closures in Europe had weighed on their sales during the third quarter.

Revenue in North America had dropped 10% YOY as shipments had been delayed over three weeks. E-commerce sales however had seen a 59% increase during the period.

The company had also said that sales at its brick and mortar retail stores in Europe, the Middle East, and the African region had all dropped but digital sales in these markets had increased by 60%. China had seen a 51% boost in sales as the country is further along in its recovery from the pandemic.

The company said that it anticipates lockdowns will start to ease in Europe in April, and delivery windows will slowly improve in North America through the remainder of the year.
For the period ended February 28th, Nike had reported earnings per share of 90 cents.

According to analysts per Refinitiv, Nike was expected to earn 76 cents. Revenue came in at $10.36 billion but $11.02 billion had been expected, per Refinitiv.

The company said that net income was $1.45 billion, or 90 cents per share, compared with $847 million, or 53 cents per share, a year earlier.

Nike’s total sales had jumped to $10.36 billion from $10.1 billion a year earlier. This was still lower than the $11.02 billion forecast by analysts.

Looking ahead, Nike has said that it expects fiscal 2021 revenue to rise by a low-to-mid-teens percentage from the prior year. Analysts had been calling for full-year revenue growth of 15.9%, according to Refinitiv.

Fourth-quarter sales are expected by the company to be up 75% year over year. Analysts had been looking for growth of 64.3%.

“We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term,” Chief Financial Officer Matt Friend said.
Nike has said it has had recent success testing new livestreaming formats. During the third quarter, Nike said it started livestreaming in Japan, Germany and Italy.

“We’re seeing phenomenal engagement for this live interaction, with average viewing doubling,” Chief Executive Officer John Donahoe said.

Nike shares are up more than 110% over the past 12 months.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article