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Nike hurt by supply chain congestion

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Miguel A. Rodriguez
Miguel A. Rodriguez
22 November 2021
Mixed quarterly figures for Nike. The sneaker giant teams up with Roblox for Nikeland

The sneaker-giant reported an EPS of $1.16, topping the $1.11 expected. However, its $12.25 billion revenue came in lower than $12.46 billion anticipated, as demand in North America weakened. However, according to Nike, the global market for its shoes and workout apparel remains strong.

Geographically, revenue in North America surged 15% to $4.88 billion, coming in short of the $5.05 billion touted by analysts. China posted the smallest gain, climbing 11%, after, in past quarters, the region has been one of Nike’s most significant revenue drivers.

Digital sales rose 29% year over year, as the brand has invested in its website and a suite of mobile apps.

Because of the mixed Q1 2022 earnings report and the supply chain congestion, Nike revised its forecast. Over the next few quarters, Nike expects the entire business to see short-term inventory shortages.

Besides the quarterly figures, Nike announced partnering up with Roblox to create a virtual world named Nikeland. The virtual world will include Nike buildings, fields, and arenas for players to compete in various mini games. Nikeland is modelled after the company’s Oregon headquarters. For now, Nikeland will be available for free. They plan to integrate in-play moments that emulate global sporting events, such as a soccer event during the World Cup or a flag football game during the Super Bowl. Also, users will enter a digital showroom to dress their avatar and check Nike’s latest product offerings.

This is not the first time when Nike is tackling the tech world or the metaverse. The company paired with Roblox in 2019 for Nike Air Max Day. Moreover, the transition to digital has been the central point for Nike as consumer habits change. According to CFO Matt Friend: “Digital is increasingly becoming a part of everyone’s shopping journey, and we are well-positioned to reach our vision of a 40%-owned digital business by fiscal 2025.”

As of Thursday’s closing bell, Nike shares are up about 13% year to date.

Source: cnbc.com, thestreet.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.