Renewed COVID-19 Lockdowns in Europe Weighed on Nike’s Q3 Sales

By Adriaan Brits Saturday, March 20, 2021

Nike, the world's largest athletic apparel company, reported lower-than-expected sales for its fiscal Q3 ending February 2021.

Nike storefront.

Congested Ports and Renewed Lockdowns Hurting Sales

Nike reported it earned $0.90 per share to beat the $0.76 expected from the market analysts. In the same period last year, the athletic apparel business earned $0.53. However, business sales missed on estimates after the athletic apparel company said it recorded sales of $10.36 billion in Q3, lower than the $11.02 billion expected from Wall Street. A year ago, Nike recorded sales of $10.1 billion.

“NIKE continues to deeply connect with consumers all over the world driven by our strong competitive advantages. Our strategy is working, as we accelerate innovation and create the seamless, premium marketplace of the future,” said John Donahoe, president and CEO of the company.

The US-based company said it expects inventory transit times to improve in North America as well as easing of the lockdown measures in Europe in April. The sportswear business expects its full-year fiscal business revenue to rise by a low-to-mid-teens percentage. On the other hand, surveyed market analysts were expecting full-year business revenue growth of 15.9%.

For the current quarter, the athletic apparel company is expecting its business sales to rise by 75% on a year-over-year (YOY) basis. A high increase is expected as 12 months ago Nike’s stores were shut amid the pandemic. This guidance came in better-than-expected as analysts were calling for a business sales growth of 64.3%.

Nike said that the Greater China region recorded the strongest growth — 51%. On the other hand, North American sales plunged by 10% due to supply chain challenges, namely global container shortages and US port congestion, the company said in a statement.

These factors “delayed the flow of inventory in the third quarter by more than three weeks, impacting timing of wholesale shipments, and partially offset by NIKE Direct growth of 15 percent,” the company said in a statement.

Lower business revenues from the closed stores in some European countries were partially offset by digital sales, which soared 60%. The sportswear company adds that about 65% of stores in Europe, the Middle East, and Africa (EMEA) are open or operating on reduced working hours.

Nike stock fell about 3% in pre-open Friday as the company’s Q3 sales missed on analysts’ estimates.

Summary

The athletic apparel business Nike reported better-than-expected earnings for its fiscal Q3, but its shares still fell as sales growth slowed down.

About the Author


Headshot of Adriaan Brits

An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.

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