Business & Investment

Nike warns of holiday delays and cuts Reuters full-year sales forecast

© Reuters. File Photo: Nike shoes are on display at a sporting goods store in New York City, NY, USA on May 14, 2019. REUTERS / Mike Segar / File Photo

By Uday Sampath Kumar and Richa Naidu

(Reuters)-Nike Inc said Thursday that it has lowered its 2022 sales forecast and expects delays during the holiday shopping season.

Factory closure for several months in Vietnam, about half of the total Nike (NYSE :) Footwear is being manufactured and is putting more pressure on the global supply chain that is already taking place under the influence of a pandemic.

Oregon-based shares fell about 9% from a record hit in August, but long after announcing that full-year sales growth is expected to grow in the mid-single digits. Trading fell 3.3%. Previously estimated increase in the low double digits.

Nike also said it expects second-quarter sales growth to be in the “low-single to flat year-on-year range” due to the factory closure.

“In Vietnam, almost all shoe factories remain closed by government order,” said Matthew Friend, Nike’s Chief Financial Officer. “From our experience with COVID-related factory closures, we have resumed full production scale. It has been suggested that it will take some time to return to. “

Nike said production in Vietnam has been lost for 10 weeks so far and it will take months to return to full production.

Securities firm BTIG downgraded Nike’s share price this month, saying that “the risk of significant cancellations from this vacation to at least next spring has increased significantly for Nike.”

“North American transit times deteriorated in the last quarter and are now almost double the pre-pandemic levels,” a friend said, adding that Nike faces similar problems in Europe, the Middle East and Africa. rice field.

Other apparel companies such as Abercrombie & Fitch and Adidas AG (DE :) are also hitting their businesses due to production problems in Vietnam. Blockades in many parts of the country are set to last at least until the end of September.

Apparel retailers had to spend more on shipping costs to tackle higher raw material costs and deliver products to stores on time.

Retailer inventories are already at historically low levels. As of the end of July, the store’s merchandise had sales of just over a month, down sharply from a nearly two-month lead in April last year, according to data from the Federal Reserve Bank of St. Louis. ..

Nike said revenues increased from $ 10.59 billion in the first quarter, which ended August 31, to $ 12.25 billion, but analysts expected an average of $ 12.46 billion, according to Refinitiv’s IBES data. ..

Nike’s first-quarter net income increased 23% to $ 1.87 billion, or $ 1.16 per share.

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Nike warns of holiday delays and cuts Reuters full-year sales forecast Nike warns of holiday delays and cuts Reuters full-year sales forecast

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