Nike is straining to get its shoes and clothes into the US from the overseas factories that produce them, dragging down sales in its largest market.
The company said today its quarterly sales in North America fell 10.4% compared to the same time last year, a greater drop than it recorded in any other region. The culprit, it said, was ongoing shortages of shipping containers and congestion at US ports that delayed shipments in the quarter by more than three weeks. Total sales still eked out a 2.5% increase, thanks to a giant 51% jump in sales in the region Nike calls Greater China.
Nike’s supply chain issues are ripple effects from Covid-19. After initially cutting back on their inventory imports because of the pandemic, US retailers shifted gears and have been rushing to stock products in anticipation of a shopping rebound. The result, however, was a surge in competition for shipping containers and traffic jams at ports on the US west coast.
On a call with investors and analysts, Nike said the snarls in its supply chain, which began in late December, left it lacking supply to meet the strong customer demand it saw and made it slow getting shipments to wholesale partners. Nike’s CEO, John Donahoe, said shipping times are still longer than normal, but the company has adjusted. It expects a more consistent flow of inventory in the next quarter that it will direct into its own channels and its preferred retail partners.
With its supply chain issues ironed out and stores reopening in Europe as the recent Covid-19 outbreaks there come under control, Nike is planning on a strong sales rebound in the months ahead. Shoppers who couldn’t get the Nike sneakers and clothes they wanted should get their chance soon.