A man walks in front of a Nike product display in New York City on February 22, 2021.

John Smith | Corbis News | Getty Images

Nike reported higher third-quarter earnings on Thursday, despite widespread port congestion in the US and ongoing store closings in Europe hurt sales growth.

While the global health crisis still leaves an overhang of uncertainty, Nike expects the lockdowns in Europe to ease in April and delivery times in North America to slowly improve as the year progresses.

Shares fell more than 2% in after-hours trading.

Here’s how Nike performed in the quarter ended February 28, compared to analyst expectations based on a survey by Refinitiv:

  • Earnings per share: 90 cents compared to 76 cents expected
  • Revenue: $ 10.36 billion versus $ 11.02 billion expected

Nike reported net income of $ 1.45 billion, or 90 cents per share, compared to $ 847 million, or 53 cents per share, last year. That was better than the 76 cents per share analysts had expected based on refinitive data.

Total revenue increased from $ 10.1 billion a year ago to $ 10.36 billion. That was less than the $ 11.02 billion forecast by analysts.

In North America, sales were down 10% year-over-year, negatively impacted by shipping delays, which Nike said has lasted for more than three weeks. It also meant that wholesale partner sales were affected as businesses such as department stores and sporting goods stores did not receive goods in a timely manner. They likely need to discount some of these goods now to make shelf space for more styles in season.

Residues at West Coast ports, a global shortage of containers and a shortage of truck drivers in the US continue to be a headache for companies from Nordstrom to Urban Outfitters to Peloton. Many have said that they expect these problems to drag on into the second half of the year.

In the Europe, Middle East and Africa region, Nike said brick-and-mortar retail sales declined due to closings and restrictions related to pandemics, while digital sales in these markets increased by 60% recently. It is said that around 60% of shops in the area are open today, with some operating at reduced hours.

In Greater China, a region still recovering from the pandemic, sales rose 51%.

Nike provided an outlook for the current quarter and fiscal year, assuming that inventory times for inventory in North America will slowly improve from here and that lockdowns across Europe will be eased from April.

For fiscal year 2021, sales are forecast to increase by a low to medium teenage percentage compared to the previous year. According to Refinitiv, analysts had called for sales growth of 15.9% for the full year.

The company expects its fourth quarter revenue to grow 75% year over year as the company expires a period of time where 90% of its own stores have closed due to the pandemic. Analysts had targeted a growth of 64.3%.

Online sales are promoted through live streaming

Nike’s direct customer business grew 20% year over year to $ 4 billion. And Nike brand online sales rose 59% as consumers wanted to update their wardrobes with new sneakers and sportswear, even if they were stuck at home. The company said it had $ 1 billion in online sales in North America for the first time.

“We continue to see the value of a more direct, digitally-enabled strategy that will give Nike even more potential over the long term,” said CFO Matt Friend.

Nike’s e-commerce business is still on track to generate at least 50% of sales in the years to come. Nike has invested more in digital media, including its popular SNKRS app, to reach younger consumers online and reduce reliance on third-party vendors.

It was also said that it recently had success in testing new live streaming formats that are still more popular in Asia than the US. But other companies, including Nordstrom and Walmart, are also experimenting in America. In the third quarter, Nike announced that it had started live streaming in Japan, Germany and Italy.

“We’re seeing phenomenal commitment to this live interaction with the average viewer doubling,” said John Donahoe, chief executive officer.

Nike stock is up more than 110% in the past 12 months at Thursday’s close. It has a market capitalization of more than $ 225 billion.

The full press release from Nike can be found here.