Nike’s shares have sunk three per cent after it warned investors that it will take “several months” for production to return to normal amid continued chaos in Vietnam.
The sportswear giant yesterday announced that it had missed average analysts’ sales expectations, while warning that its outlook for the full year has now been lowered.
It comes as Vietnam, where Nike sources roughly 50 per cent of its footwear and a further 30 per cent of its apparel, continues to struggle with a surge in coronavirus cases forcing around 80 per cent of Nike’s footwear factories to remain shut.
In its first fiscal quarter Nike reported revenues of $12.25 billion, below the $12.46 billion predicted by analysts, according to data from Refinitiv.
Despite this, it sold more items at full price helping its profits come slightly above expectations of $1.11 earnings per share, at $1.16.
READ MORE: Nike to lose 160 million pairs of shoes after factory closure in Vietnam
However, the ongoing production delays are set to compound Nike’s decline, seeing it drop its expectations for the full-year from low-double-digit growth to mid-single-digit growth, coming below average expectations of 12 per cent growth.
For the coming quarter, it also said sales were due to come in flat or low-single digits, falling well short of average expectations of 12 per cent growth.
It added that the ongoing disruption was due to lead to short-term inventory shortages, compounded by shipping which are taking around twice the time of those pre-pandemic.
“We’ve already lost 10 weeks of production, and that gap will continue. … It’s going to take several months to ramp back to full production,” Nike’s chief financial officer Matt Friend said.
