Nike dropped on poor sales

What happened?

Yesterday, Nike reported better-than-expected earnings: a profit of 90 cents a share vs the projected 76 cents. However, the sales came out much worse than anticipated. Sales were $10.4 billion, which is below analysts’ estimates of $11 billion. In Europe, revenues dropped as many stores remain closed due to the Covid-19 pandemic.

Supply chain problems

Besides, there are some serious problems with the supply chain. A huge part of Nike’s sneakers just weren’t delivered to North America, its biggest market. As a result, in North America, revenue dropped 10% year over year. For comparison, in China, where the virus has been taken under control a long time ago, sales rose by 51%!

E-commerce boom

By the way, while Covid-19 was devastating for street shops, online shopping has hugely improved. E-commerce has helped Nike to increase online orders, which sales climbed 59% last quarter.

What does it mean?

The whole effect was negative, so Nike can continue dipping today. It may reach the 50-day moving average of $140.00, which it will struggle to cross on the first try. If it crosses it, the way to the low of March 9 at $135.00 will be open. We shouldn’t forget that after the fall always goes the rise. So, when the price bounces off the dips and crosses the resistance zone of $145.00-147.00, the way up to the key psychological mark of $150.00 will be open. The good news for FBS traders is that they can make both buy and sell trades. 

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Author: FBS Analyst Team

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