NKE Stock Down 5%, Nike Reports Mixed Results for Fiscal Third Quarter, Sales Decline Due to US Port Congestion

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American multinational corporation Nike Inc (NYSE: NKE) has reported mixed financial results in its fiscal third quarter. The earnings result for the third quarter, which ended on the 28th of February, 2021, was announced by Nike on the 18th of March.

Nike said earnings per share (EPS) grew over earlier predictions. Before now, analysts said EPS would be 76 cents. However, the multinational corporation noted that earnings per share reached $90 in the quarter.

Nike Records Profits in Fiscal Third Quarter

As stated in the results, third-quarter profits were above estimates despite that the US port congestion affected sales growth. North America reported a 10% dip in revenue amid global container shortages and congestion at the US port. The US port congestion has been affecting inventory flow and the schedule of wholesale shipments. The delay in wholesales’ shipments affected Nike’s wholesale partners as department stores and sporting goods outlets did not receive their orders on time. As a result, stores may need to sell these goods at a discounted rate to make room for new models.

Nike’s direct sales were up 20% on a reported basis to $4 billion. Also, the revenues jumped 165 on a currency-neutral basis. Also, revenues were $10.4 million. This is a 3% growth year-over-year and 2% loss on a currency-neutral basis. Analysts also expected that revenues would be $11.02 billion.

Furthermore, the financial results revealed that Nike Brand digital sales advanced 59% or 54% on a currency-neutral basis. The gross margin also improved by 130 basis points to 45.6%.

Nike was also affected by the coronavirus pandemic. The company’s business in Europe, Middle East, and Africa regions declined as stores were closed as a result of the lockdown caused by the health crisis. On the other hand, digital markets in the areas soared 60%. As the lockdown eases globally, Nike said about 60% of its stores are now opened. While some are fully opened as they were before the pandemic, some stores still operate on reduced working hours.

Nike’s business in Greater China jumped 51% as it rebounds from the negative impact of the coronavirus.

Nike’s Expectations as Pandemic Eases

Being optimistic about the current fiscal quarter, Nike expects the European government to lift restriction bans in April. The company also mentioned that it anticipated gradual recovery in North America.

Analysts at Refinitiv are also expecting a 15.9% full-year revenue growth. Also, there are predictions by Nike that fourth-quarter sales would increase 75% year-over-year.

Even as the pandemic restricted shoppers from visiting the stores, online sales for the Nike brand surged 59%. For the first time, Nike’s North America business saw $1 billion in online sales. The company’s chief financial officer Matt Friend said:

“We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term.”

At the time of writing, Nike stock is 4.88% down, trading at $136.33.

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.