Nike suffers from corona stop in Vietnamese factories

Released on 24.09. 2021

  • Nike’s business is growing with the relaxation of Corona restrictions. Photo: Axel Heimken

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So far, Nike has benefited massively from the expiry of the corona restrictions this year. But now the Adidas rival is making plant closings in the fight against the virus in Vietnam.

Beaverton (dpa) – Adidas competitor Nike is being slowed down by the month-long closure of its Vietnamese factories due to strict corona measures.

«We have already lost ten weeks of production “Said CFO Matt Friend when presenting the latest quarterly figures. For some of the plants, plans to reopen have already been approved. However, previous pandemic experiences have shown that it will take several months before production reaches the usual level.

Nike produces around half of its shoes in Vietnam according to earlier information and 30 Percentage of sportswear. In view of the plant closings, some production has been relocated to plants in China and Indonesia, said Friend. Due to the overload of global supply chains, the finished goods currently need 45 days to get from Asia to North America – about twice as long as usual.

The result: For the current fiscal quarter, Nike only expects sales to match the previous year’s level and does not rule out a slight decline. The bottlenecks are thus choking off a rapid recovery of the Nike business after declines in the Corona year 2020. In the first quarter of the fiscal year, which ended at the end of August, revenues increased year-on-year by 16 percent to 12, 25 Billion dollars (10, 45 billion euros). Analysts had expected an even stronger increase to around 12, 5 billion dollars. In the quarter, sales almost doubled.

In view of the current development, Nike has now also lowered its sales forecast for the entire financial year. Instead of a double-digit percentage growth, only a single-digit increase is expected. The share temporarily lost around 3.5 percent in after-hours trading on Thursday.

Nike boss John Donahoe’s strategy includes expanding direct business with consumers. Here sales even increased by 28 percent, emphasized Nike. In addition to the online business, the reopening of the company stores with the lifting of the corona restrictions contributed to this.

The profit rose by 23 percent to 1, 87 Billion dollars.

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