What’s Going On Here?Nike reported better-than-expected profit late on Thursday, but there’s a problem: the sportswear giant’s supply chain just won’t play ball. What Does This Mean?All these lockdowns have created a conveyor belt of runners, yogis, and crossfitters, and they all want to pursue their newfound passion in the finest Nike gear. Trouble is, most of the company’s Vietnamese factories have been shut down due to coronavirus outbreaks, losing the company around 10 weeks’ worth of production time. Those factories aren’t expected to reopen until October, and even then it’ll take a few months to fully ramp back up. And even then it’ll take twice as long to transport products overseas from Asia as it did before the pandemic. Nike’s keenly aware: the company slashed its revenue outlook for this year and next, which might be why investors initially sent its shares down more than 4%. Why Should I Care?The bigger picture: No discounts for you.
At least Nike’s bottom line is looking pretty healthy: its profit was up 23% from the same time last year, which could be because it was selling fewer of its products via discount-happy wholesale partners and offering fewer markdowns of its own. Nike’s investment in ecommerce likewise seems to be paying off, with revenue in the segment up 29%.
Zooming out: Even Costco’s increasing prices.
Costco’s been having a pretty crap time with production too: the American wholesaler has been limiting the sale of toilet paper and similar products to avoid selling out completely, having struggled to get its hands – and tush, presumably – on the supply it needs. Odds are that’ll impact no one more than shoppers, with Costco estimating that the price of its products will climb by around 4% over the next few quarters. | 