The supply chain disruption caused by the epidemic has slowed down the production and shipment of clothing, footwear and accessories products worldwide. This situation has been reflected in Nike’s financial report.
Nike announced on Thursday that revenue for the first fiscal quarter of fiscal year 2022 ended August 31, 2021 was US$12.25 billion, an increase of 16% over the same period, compared with the previous fiscal quarter Flat. The results were below Wall Street analysts’ expectations, which had been for $12.47 billion.
Nike brand online revenue increased by 29% year-on-year. Nike brand direct sales were US$4.7 billion, a year-on-year increase of 28%.
From a regional perspective, in the first fiscal quarter, Nike’s revenue in Greater China increased by 11% year-on-year to US$1.98 billion, the smallest increase among all regions. Revenue in North America increased 15% to US$4.88 billion, and revenue in Europe, the Middle East and Africa increased 14% to US$3.31 billion.
Nike executives said that consumer demand for the company’s products remains strong. If the supply chain is not blocked, the company’s sales in the first fiscal quarter may be will be higher. They warned that production disruptions in Vietnam and Indonesia would hurt the company’s short-term prospects.
Nike Chief Financial Officer Matthew Friend said on a conference call: “We are not immune to global supply chain headwinds.” He said, The company lost 10 weeks of production in Vietnam due to a lockdown in Vietnam due to a surge in COVID-19 cases, and it takes an average of 80 days to move products from Asia to North America, twice as long as before the epidemic.
More than half of Nike’s footwear and about a third of its apparel are produced in Vietnam, where the local government recently extended a lockdown until at least October 1.
Nike executives said they expect revenue growth in the current quarter ending in November to be flat due to the impact of factory closures and extended shipping times. Nike’s sales surged earlier this year as consumers pent up demand for sneakers and sportswear due to the pandemic last year.
Vietnam’s lockdown began in the summer, when clothing sellers typically start stocking up on clothing for the year-end holidays. Analysts say supply chain issues are likely to become more complex as orders pile up and international shipments flood.
Nike executives said the company’s inventory before the holidays was low and it would take months to resume full production. The company is moving some production out of Vietnam and using air freight to avoid shipping bottlenecks. </p
