Nike Inc has cut its fiscal 2022 sales predictions as it expects the holiday shopping season to be delayed due to a supply chain crunch that has left it with soaring freight costs and products stuck in transit.
The Beaverton, Oregon-based company now expects a mid-single-digit increase in full-year sales growth, versus the low-double-digit increase it had previously estimated.
Nike also expects second-quarter revenue growth to be in the range of flat to down low-single digits versus the prior year due to factory closures. Brokerage BTIG this month downgraded Nike's stock, saying the risk of significant cancellations beginning this holiday and running through at least next spring has risen materially for Nike.
Nike’s revenue rose to $12.25 billion from $10.59 billion in the first quarter ended Aug. 31, while analysts on average had expected $12.46 billion, according to IBES data from Refinitiv. The brand’s net income rose by 23 per cent to $1.87 billion, or $1.16 per share, in the first quarter.
Apparel retailers have had to grapple with higher raw material costs, and spend more on shipping to get their products in stores on time. Apparel companies including Abercrombie & Fitch and Adidas AG have also taken a hit to their businesses due to production issues in Vietnam. Lockdowns in many parts of the country are set to last at least until the end of September.