Nike’s quarterly results expected to be lower than forecast: analysts

Ahead of Nike Inc’s quarterly results. Wall Street is expecting a gloomy outlook since sales of the sportswear giant in 2022 is expected to be significantly hit by rising COVID-19 cases in China and supply chain issues from the Russia-Ukraine conflict.

Nearly 10 brokerages have cut the stock’s price targets on fears that a lift from strong sneaker demand in North America will be offset by persistent shortages, stemming from factory closures in Vietnam.

Nike’s current quarter sales are also expected to take a hit from rising COVID infections in China which has resulted in the temporary shuttering of stores as well as from the closing of its online business in Russia following the Russian invasion of Ukraine.

“The recent rise in geopolitical uncertainty, increase in oil prices, and growing strength of the U.S. dollar present risk of slowing growth for Nike’s international segments ahead,” said Jefferies analysts.

Analysts at Credfit Cruise have slashed forecast for Nike’s current-quarter revenue growth in Europe to 7% from 15%, citing an estimated 2% hit to total sales from the Russia exit.

Resilient demand despite higher prices and a pivot to selling more products directly to consumers could help ease pressures of higher supply chain costs and ease margins.

“There is still a lot of strength in the way that Nike is running its retail strategy, and in its product. Those two strategies are key for its future,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.

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