Nike’s Shares Decline Further After Cutting Revenue Forecast

The shares of sports apparel manufacturer Nike are down by more than 6% today after the company cut its revenue for the fiscal year.

Nike Cuts Revenue Forecast For 2022 Fiscal Year

Sneaker giant has been underperforming over the past 24 hours since the company revealed that it had cut its revenue forecast for the 2022 fiscal year. The company decreased its revenue forecast for the fiscal year to account for labor shortages, longer transit time and extended production shutdowns in Vietnam.

According to the sports apparel manufacturer, the full-year sale for 2022 is set to increase at a mid-single-digit pace, which is lower than the previously estimated low double-digit growth. In Q2, Nike’s sales were flat and didn’t grow more than 10%. Analysts were expecting its revenue to grow by 12% for the year, as well as 12% for the second quarter of the current fiscal quarter.

Nike’s revenue was $12.25 billion, which is lower than the $12.46 billion analysts had predicted. However, the earnings per share of $1.16 were better than the $1.11 that market analysts had predicted.

Over the coming quarters, the company said it expects its business to experience short-term inventory shortages. The CFO, Matt Friend, said the prolonged shutdown of operations in Vietnam had affected the company’s inventory.

Nike manufactures roughly 50% of its footwear and 30% of its apparel in Vietnam. The government had to shut down the facilities as it tried to curb the spread of the Coronavirus. Friend told analysts that Nike had lost ten weeks of production, and the gap will continue. As such, he expects it to take the company months to ramp up production.

NKE Down By Over 6% Today

The shares of Nike are down by more than 6% today, following the losses recorded yesterday. NKE is trading at $149 per share, down by more than 6%. The losses started yesterday after the news broke out, and NKE suffered further losses during the pre-trading session.

Year-to-date, NKE’s performance has been average. The stock has been up by less than 10% since the start of 2021. The Covid-19 pandemic has affected the company’s operations, similar to some of the other major brands globally.