Nike (NYSE: NKE) shares fell on Friday, following the announcement of the company’s earnings on Thursday. Moreover, the company revealed it was laying off employees in an effort to construct a “flatter, nimbler company.” Shares fell about 4% in midday trading, though it has risen over 95% within the last year and has a market value of USD217 Billion.
The multinational corporation reported quarterly revenue of USD10.3 Billion as well as profits of USD1.4 Billion within the quarter ending February 28. According to the company, the rise in profits was partly due to “lower wage-related costs.” Sales and administrative costs dropped USD242 Million, compared to the same time period last year.
“Nike’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, Nike’s CEO. “Fueled by compelling innovative products and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”
Amid the pandemic, the retailer experienced backlogged ports in its fiscal third quarter, ultimately delaying shipments. Consequently, merchandise arrived weeks late to its locations as well as to its wholesale partners. Furthermore, Nike’s sales fell at stores in Europe, Middle East and Africa during the quarter, due to Covid-related closures and restrictions.
“The good news here is supply chain issues should subside in the next few quarters while Europe will open back up in time as the vaccine is rolled out further, ” Jefferies analyst Randal Konik said in a research note. Konik rates Nike shares a hold, with a $140 price target.
Nevertheless, Nike continues to highlight its wins such as direct-to-consumer business growth, drive in China and healthy online sales.