Nike had quarterly results out on Thursday evening, and to my surprise they were weaker than expected. Sales were only up 12% to $12.2 billion, but Wall Street analysts were forecasting $12.5 billion.
The stock price slumped by 6.3% on Friday because Nike CFO Matthew Friend lowered the company's sales forecast for the rest of 2021, citing production and shipping problems. Factory closures in Vietnam caused by Covid prevented Nike from keeping up with consumer demand. They lost ten weeks of production in that country since mid-July.
Global shipping delays worsened (from Asia to North America now takes up to 80 days) due to port congestion and labour shortages. That's causing a lot of valuable inventory to be stuck in transit.
For the record, I've experienced these problems myself. Online orders of Nike Air Zoom Alphaflys took longer than usual to arrive. Some trail shoes I ordered got cancelled and Nike gave me a voucher to apply to something else.
All of these problems mean that full-year growth will be in the mid-single-digits rather than a low double-digit percentage rate Nike targeted earlier.
This is exactly the kind of setback that we like to ignore. The company is doing really well, and demand is strong, so sales and profits will rebound soon. Share price weakness now presents long-term investors with a great buying opportunity.