Supply chain bottlenecks and China’s epidemic prevention and control policy are causing headaches for major sports brands. Under Armour (hereinfollowing referred to as UA) warns that operations in Asia will face challenges this year, and Adidas predicts that revenue in Greater China will be substantial this year. The stock price of both companies fell on Friday (6th), and Nike’s stock price fell by regarding 10% in the past two days.
UA (UAA-US) announced an unexpected first-quarter loss before the market on Friday, causing the stock to open sharply and tumble nearly 23.79% to close at $10.89 per share. UA lost $60 million in the first quarter, mainly due to supply chain delays and China’s recent lockdown, excluding a one-cent loss of one cent, total revenue rose slightly to $1.3 billion last quarter, but revenue in the Asia-Pacific region declined 14%.
UA is now forecasting full-year adjusted earnings of between 63 cents and 68 cents a share, well below analysts’ forecast of 83 cents.
Adidas also fell 3.64% to 181.36 per share following its earnings report on Friday EUR.Its first-quarter net profit fell 38% year-on-year to 310 millionEURDue to the impact of China’s closure on consumer demand, revenue in Greater China fell by 35%.
Adidas kept its forecast for full-year revenue growth unchanged, but said it may fall at the low end of its original forecast range, and that revenue in Greater China is likely to fall sharply.
China is not only a key market for many major sports brands, but also the key to their supply chain network in the Asia-Pacific region. Dragged down by UA and Adidas, Nike (US-US) fell 3.5 percent to $114.49 a share on Friday, and Lululemon (LULU-US) fell 7.7 percent to $317.05 a share.
Nike’s Challenge in China
For Nike investors, the past two days have been quite difficult. The stock closed down nearly 6% on Thursday, a rare decline in two years. Combined with Friday’s decline, the stock fell regarding 10% in two days.
Baird analyst Jonathan Komp recently warned that the challenges posed by the outbreak in China are comparable to those in early 2020, as retail outlets in many places, including the important eastern economic region, are closed, while in other outlets that are still open, The number of visitors has also dropped significantly. Additionally, broken links made it difficult for Nike to fulfill online orders and deliver merchandise to wholesalers.
Other analysts, like Baird, are cautious, such as JPMorgan’s Matthew Boss, who expects the revenue-boosting benefit to be revised down from a previous estimate of 6% for Nike’s commitment to operating better this quarter than last. 1%.
Nike is scheduled to report its fiscal fourth-quarter earnings on June 30, and FactSet analysts’ forecast for earnings per share has been revised down by at least 11% from three months ago.