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Nike's Disappointing Quarter: What Happened?

By Neil Patel and Brian Withers – Oct 23, 2021 at 10:00AM

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Supply chain delays, labor shortages, and production problems are causing Nike to lower its sales guidance.

Nike (NKE -0.34%) is struggling with supply chain woes and has lowered its guidance for the current quarter and for fiscal 2022. In this video clip from "Beat & Raise," recorded on Sept. 24, Fool.com contributors Brian Withers and Neil Patel review the numbers behind Nike's disappointing quarter. 

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Brian Withers: And we're moving on to Nike, Neil, the market didn't seem to like what Nike had the say.

Neil Patel: Yeah, Nike I think was down six percent give or take today. Overall disappointing quarter revenue of 12.25 billion up almost 16 percent year-over-year but miss Wall Street's estimates by 200 million. North American revenue was also soft, that came in just under 4.9 billion. Again missing Wall Street's estimates there. EPS of 116 was 22 percent up, increased 22 percent year-over-year, and that beat Wall Street estimates. Like many western US based consumer brands, you see China as the next growth lever. In the most recent quarter, China was actually the slowest growth region for Nike which is surprising.

There's a lot of coverage about Nike over the past few years have been making a big push in digital, and so digital sales were up 28 percent which is another bright spot. But I think the market reacted negatively because we care about guidance, and Nike they lowered their guidance actually for the current quarter and for fiscal '22. Again, raise your hand if you've heard this before. Supply chain delays, labor shortages, and production shelf. All of those are causing Nike to lower their sales guidance. For the current quarter, the company is expecting sales to be flat or slightly down year-over-year. Then for the full year, they said they called for an increase of mid-single digits and that was lower than the previous guidance of low double digits. Again, Wall Street was expecting 12 percent revenue growth this quarter and 12 percent revenue growth for the full year. That was what disappointed the market.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nike. The Motley Fool has a disclosure policy.

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