Ship Gets Real

Image source: Alano Design, mayday6510 - Shutterstock

What's going on?

Nike might not be the diehard ports fan it used to be after reporting a mixed set of quarterly earnings late last week.

What does this mean?

Nike’s performance last quarter was an emotional rollercoaster: on the upside, the retail giant turned up a higher profit than analysts were expecting, but on the down, its revenue came up short (tweet this). Likewise, total ecommerce sales grew almost 60%, but sales in North America – its biggest market – dropped 10% from the same time last year.

The shortfall, Nike said, was partly down to shipment delays that have lasted almost a month and left its products sitting around US ports. Clearly, that’s meant neither Nike nor its network of retailers – from department store Macy’s to sports specialists Dick’s – are able to sell them. And even when the goods do finally arrive, they’ll be so last season that those retailers might have to offer profit and brand-damaging discounts to get them off the racks.

Why should I care?

For markets: Spare a thought for the little guys.

Nike’s stock dropped 4% on Friday, but it might’ve fallen more if not for its positive outlook: the company is – arguably prematurely – expecting European lockdowns to ease and its stores to reopen next month, and thinks its Stateside port issues will get better as the year goes on. Smaller American companies might not be so lucky, mind you: they don’t have the corporate manpower to navigate the US shortage of drivers or the global shortage of shipping containers.

The bigger picture: Someone has to pick up all those packages.

Over a third of Nike’s sales are made online now, and that surge in demand is being met by the likes of FedEx, which reported stronger-than-expected earnings of its own late last week. The logistics company’s stock jumped 7% on Friday, and investors seem so positive on the sector that they sent rival UPS’s shares up 2% too.

Originally posted as part of the Finimize daily email.

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