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Nike Beats Earnings but Misses Revenue Estimates Amid Port Congestion Delays and Store Closures

Nike Inc. delivered a mixed third quarter as port congestion delays and store closures abroad took a swing at its balance sheet.

For the three months ended Feb. 28, the sportswear giant logged earnings that rose 71% to $1.4 billion, or 90 cents per share, trouncing the 76 cents per share analysts predicted. Revenues, on the other hand, increased 3% to $10.4 billion but fell sizably short of analysts’ forecasts of $11.02 billion.

Sales for the Nike brand fell 2% to $9.8 billion, which the Beaverton, Ore.-based company attributed to disruptions related to the COVID-19 pandemic, while Nike Digital surged 54%. (Owned and partnered digital now makes up more than 35% of Nike’s business.) Sales for Converse rose 8% to $570 million, led by “strong” digital performance in North America and Europe.

“Nike continues to deeply connect with consumers all over the world driven by our strong competitive advantages,” president and CEO John Donahoe said in a statement. “Our strategy is working as we accelerate innovation and create the seamless, premium marketplace of the future.”

By geography, the Swoosh saw revenues in its home turf of North America decline 11% on a currency-neutral basis — driven by global container shortages and port congestion delays, which stalled the flow of inventory during the quarter by more than three weeks. Still, the North America business reported its first-ever quarter of a billion dollars in owned digital revenues.

In the Europe-Middle East-Africa region, it noted a drop in brick-and-mortar revenues, with 45% of its physical fleet shut down. This, however, was partially offset by a 60% gain in digital sales. (Today, roughly 65% of Nike’s owned stores in the EMEA region are open or operating on reduced hours.)

What’s more, revenues in Greater China advanced 42% on a currency-neutral basis, reflecting “strong double-digit growth” from the prior year period, as well as a 44% improvement in digital sales.

At the end of the quarter, Nike had cash, equivalents and short-term investments that totaled $12.5 billion. It expects to resume share repurchases under its existing program as soon as next quarter.

“Nike’s brand momentum is as strong as ever and we are driving focused growth against our largest opportunities,” EVP and CFO Matt Friend said in a statement. “We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term.”

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