Goldman analyst Kate McShane said the group's current sourcing issues are "transitory", noting that the stock's recent pullback following its third quarter earnings update represents a buying opportunity based on a "healthy industry backdrop with a company-specific, continued focus on innovation to drive growth."
Nike cut its full-year sales forecast last month to a "mid-single digit" growth rate, from a previous estimate of double-digit gains, owing to supply chain issues that it said were impacting the movement of goods from Asia to north America.
Over the summer, two Nike suppliers in Vietnam, where around half its shoes and a third of its apparel are produced, planned production cuts to meet COVID requirements amid a surge in Delta infections in the south Asia region.
"Several of our factory partners in Vietnam and Indonesia were required to abruptly cease operations in the first quarter," Nike CFO Matthew Friend told investors on September 23. "As of today, Indonesia is now fully operational, but in Vietnam nearly all footwear factories remain closed by government mandate."
"Our experience with COVID related factory closures suggests that reopening and ramping back to full production scale will take time," he added.
Nike shares were marked 0.8% higher in late-morning trading Tuesday to change hands at $151.45 each, a move that would extend the stock's year-to-date gain to around 8%.
Bank of America analysts Lorraine Hutchinson, however, noted recently that supply chain issues are "not unique to Nike and we expect delayed deliveries across the entire athletic ecosystem".
Nike's earnings for the three months ending in August, its fiscal first quarter, were pegged at $1.16 per share, up 22.1% from the same period last year and just ahead of the Street consensus forecast of $1.11 per share. Group revenues, Nike said, rose 16% to $12.2 billion, just shy of analysts' estimates of a $12.465 billion tally.
China sales were up 11% from last year to $1.982 billion, Nike said, while North American sales, Nike's biggest market, grew 15% to $4.879 billion.
Gross profit margins rose 170 basis points to 46.5%, "led by margin expansion in our NIKE Direct business, a higher mix of full-price sales and favorable changes in foreign currency exchange rates."