Monday, December 20, 2021
North America business is flourishing
Nike surprises with a profit boost
In autumn, closed factories in Southeast Asia are still making it difficult for the sporting goods manufacturer. That dampens sales expectations for the second quarter enormously. Then things turn out differently: The result is much better than expected and the share also rises.
Thanks to a strong North American business, the world’s largest sporting goods manufacturer, Nike, earned and turned over more than in the same period last year. In the three months to the end of November, net profits rose seven percent to 1.34 billion dollars, as the company announced on Monday. Sales improved one percent to $ 11.36 billion. Analysts had only expected an average of $ 11.25 billion.
In North America, Nike’s largest market, sales climbed twelve percent. In after-hours trading, Nike shares rose four percent. In September, Nike warned of the sluggish performance in the second quarter (towards the end of November) because of the weeks-long shutdown of its factories in Vietnam. In the worst case, sales could even stagnate, CFO Matt Friend said at the time.
Excluding exchange rate effects, revenues in the Americans’ second fiscal quarter would have been as high as in the previous year. The group referred to persistent delivery bottlenecks. In China, sales even fell significantly due to the lack of inventories. North America and Europe, on the other hand, have brought growth, also because goods previously on the transport routes have now increasingly reached the markets.
For the current financial year 2021/22 (as of the end of May), Nike is assuming mid-single-digit growth according to previous information. Competitor Adidas, Nike’s toughest pursuer on the world market, had lowered its sales forecast for the current year due to delivery bottlenecks and increased freight prices – to an increase of 17 to 18 percent instead of up to 20 percent previously. Meanwhile, the two rivals Puma and Under Armor are more confident about the business and each expect sales growth of 25 percent in the current year.