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Nike (NKE) -6% as sales forecast crimped by supply chain issues
Nike (NKE) lowered its sales forecast on Friday after admitting that it was “not immune” to the supply chain chaos causing problems for the world’s biggest companies.
Nike (NKE) shares slumped 6% in Friday’s trading after the sports footwear and clothing company admitted that it was “not immune to global supply chain headwinds” as it offered a more conservative holiday sales forecast.
Nike now expects to deliver around 4% to 6% growth in sales for the full year amid concerns about how supply chain disruptions, which have been cited by a number of big corporations, will affect its business in the short term.
CFO Matthew Friend said that consumer demand for its products “remains at an all time high” and that there is still internal optimism about brand momentum and its connections with customers globally.
Nike’s raw numbers still look very healthy, with the Oregon-based company guiding for $1.16 earnings per share for the quarter to 31st August, which is five cents better than the Wall Street consensus.
If this comes to pass, earnings will have soared 22.1% year-over-year, while group revenues are expected to jump 16% to $12.2bn, though this figure is short of the $12.465bn analyst forecasts.
Sales are also strong in both China and North America, with the former set to bring in $1.982bn (+11%), and the latter $4.879bn (+15%).
However, Nike has been constrained by the closure of several supply factories in Asia due to COVID-19 restrictions implemented following the outbreak of the Delta variant.
Nike said that its partners in Indonesia are now “fully operational” but that a government mandate has halted almost all production in Vietnam.
Friend added: “Our experience with COVID related factory closures suggests that reopening and ramping back to full production scale will take time.”
Nike shares eventually closed 6.26% down at $149.59 in New York on Friday.
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