'Supply chain challenges' hit revenues at Nike

Will Green is news editor of Supply Management
19 March 2021

Nike has said port congestion delayed inventory supply and held back the company’s growth in North America.

The company said revenue dropped 10% in North America in the three months to 28 February 2021 due to “supply chain challenges”, which included global container shortages and US port congestion.

In an earnings call Matt Friend, executive vice president and CFO, said: “Disruption in the global supply chain due to container shortages, transportation delays, and port congestion has interrupted the flow of inventory supply.

“The result has been supply shortages relative to continued strong marketplace demand.

“In North America specifically, inventory supply was delayed by more than three weeks, impacting the timing of wholesale shipments and growth in the quarter.”

Nike said inventories were up 15% year-on-year to $6.7bn, largely because of “higher in-transit inventory in North America due to US port congestion and temporary store closures in EMEA”.

Overall third quarter revenues were up 3% year-on-year to $10.4bn.

Friend said: “We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term.”

In February Peloton said it would be spending $100m on expedited shipping and increased use of air freight to manage a backlog of orders caused by port congestion.

Container traffic has been disrupted globally by the coronavirus pandemic and in November 2020 the US Federal Maritime Commission launched an investigation into the behaviour of shipping companies amid concerns about “potentially unreasonable practices” at jammed ports, notably the ports of Los Angeles, Long Beach, New York and New Jersey.

In the UK trade bodies have called for an inquiry into port disruption and the shipping market, with reports that shipping costs have rise 170%.

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