Nike Q3 - Can't Ship Sneakers Fast Enough

Nike reported its third quarter numbers last week. They beat expectations on earnings but missed on revenue. The company has always reported outside of the traditional 'earnings season', giving us a teaser of what is to come when the rest of the market starts to report in the middle of April.

The headline story of the results was that the company can't ship their shoes fast enough. There is a global lack of shipping containers and US ports are congested, all a by-product of Covid. Unfortunately, if your shoe is not available when a customer wants to buy, that is a lost sale in most cases. As a result, Nike sales in North America dropped by 10%. The good news though is that the company saw growth of 51% in China. Overall, Nike eked out a revenue gain of 3% for the quarter.

The company's long-term trend is to move away from third party re-sellers and sell directly to the customer. This trend has continued, increasing the profit margin on every pair of shoes sold. In the last quarter, online Nike sales accounted for 35% of the overall revenue. Management expects this to be 50% in the near future.

Reading these results you can see the incredible strength of the Nike brand. The shoes sell themselves, what a great company to own.