Surging Demand In North America Helps Sportswear Firm Nike To Beat Quarterly Revenue Estimates

Continued strong demand for its sports shoes and apparel from its customers of North America prompted the sports apparel giant Nike to comfortably beast estimates of analysts for quarterly revenue and profits.

Making the announcement, the company expressed its confidence on the easing of the current constraints in the global supply chain in the next fiscal year of the company.

The stocks of the company rose by 3.7 per cent following the announcement.

There was a 12 per cent surge in the sale revenues for the second quarter of the company in its largest market – North America, as there was greater confidence among consumers to get back to physical stores for shopping and spend heavily on sneakers for running and hiking as the American economy reopened and more people got completely vaccinated.

“Nike is doing well to get in as much inventory as possible. Long term, I don’t see the momentum going away from the company because the products are so highly coveted by consumers,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.

A record in sales Black Friday sales in North America was reported by the sportswear maker through its direct-to-consumer business channel. The company said the record sale was achieved despite issues in its supply chain just ahead of the holiday season. The company noted that issues in its global supply chain were because of closure of its factories in Vietnam for months. About half of all Nike footwear is manufactured in the South Asian country.

However, there was a 20 per cent drop in Nike’s revenue in Greater China in the second quarter because of those supply issues and fresh Covid-19 induced lockdowns.

At the factories in Vietnam, which were now completely open and operational, the weekly production rate for the company’s footwear and apparel was at about 80 per cent of the volume of production prior to the closures, Nike also said.

The company’s Chief Financial Officer Matt Friend said that factory closures forced the company to cancel production of roughly 130 million units.

There was a 1 per cent rise in Nike’s overall revenue on the average in the second quarter of the current year to $11.36 billion, beating analysts’ estimates of $11.25 billion, according to IBES data from Refinitiv.

The company forecast a low single-digit surge in its revenue for the third quarter compared to previous estimates of a 2.5 per cent growth.

Nike’s profit of 83 cents per share beat estimates of 63 cents.

(Adapted from USNews.com)

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