Nike tops earnings estimates despite shortfall in sales amid supply-chain issues. Camilla Yanushevsky, CFRA equity analyst, joins Yahoo Finance to break down the details.

Video Transcript

- All right, let's take a look at one company's fundamentals. Actually, we were just showing the stock, it's Nike. And that's a company that's been suffering from some of those bottlenecks that we were talking about in terms of supply. The company came out with a quarterly revenue that missed analysts' estimates as a result of that-- some of those shipping delays. Even though the company did see digital sales rise 59%, that was a highlight during the quarter.

Camilla Yanushevsky who was a CFRA equity analyst is joining us now. So Camilia, how concerned are you about some of these shipping delays? I mean in theory, it should be temporary, right? But how long is it going to last? How much is it going to cost the company?

CAMILLA YANUSHEVSKY: Yeah, definitely a mixed bag report from Nike. As you noted sales missed. And that really came down to supply and demand imbalance In North America, specifically in the Los Angeles and Long Beach ports, there's a lot of congestion. Supply was delayed up to three weeks. Then in Europe there is COVID-19 resurging and a wave of store re-closures.

But bigger picture though, what I want to underscore, is that Nike actually raised their full year sales guidance. So we see the demand pulling forward into the fourth quarter. And it really underscores our confidence that the strength of the Nike brand is stronger than ever.

- You know, one area of strength, Camilla, that stood out is China. I mean, in some cases over 40% growth depending on the product category. Why are they seeing that-- those types of out sized growth rates in China?

CAMILLA YANUSHEVSKY: Absolutely, China is Nike's largest growth market. And the company has done phenomenally in terms of targeting the marketing, the message, the product to the Chinese consumer. And they've also partnered with different organizations and governments in the region. They have a partnership with the Ministry of Sports there, the Ministry of Education there.

And then they're also capitalizing on some secular trends there. Specifically there's a lot of interest in health and wellness in the region. And then also the NBA is the most popular sports league there.

- And Camilla, do you feel as though-- or do you think that Nike will be tossed in the cross hairs with what appears to be worsening trade tensions between the US and China?

CAMILLA YANUSHEVSKY: Nike has a very diversified supply chain. So that's not a concern for us. We did highlight though for investor-- [AUDIO OUT] morning-- [AUDIO OUT] I don't know-- [AUDIO OUT] why-- [AUDIO OUT] just go out there and buy it. And first that's the resumption of team sports. Second is to Consumer Direct Offense, which we think presents a huge margin opportunity there. And then third with the new CEO they've had an organizational revamp, and we think that's really going to unlock and accelerate growth opportunities. You mentioned China, but also, let's not forget women's.

- You know Camilla, I want to ask a little bit about that organizational shift. I'm wondering how you guys are thinking about a company-- I mean, it's not a turnaround story, but it's a company in transition-- and I think there's been some reporting around some rockiness around, you know, Nike shuffling their executive ranks. Where do you guys think they are at in that transformation for it to really be a John Donahoe's company?

CAMILLA YANUSHEVSKY: When it comes to Nike in the retail landscape, Nike is really on a league of its own. You mentioned China as a great growth opportunity. I also did want to mention women's because women's typically accounted for about 25% of Nike's sales. If you look how women's has performed recently, women's growth has outpaced overall growth of the Nike brand for eight consecutive quarters. So Nike continues to be a growth story. There's a long runway ahead in that segment.

- Camilla, just sort of as a follow up on that, and the management change, I mean, there had been some widely reported upon cultural issues at Nike. I mean, you're talking about the women's brand, but I guess I'm referring to women inside the company, working at the company. Do you think, John Donahoe will be able to fix some of those issues at the company? Has he begun that work, are you confident that he's going to be able to?

CAMILLA YANUSHEVSKY: I think the women's sales performance speaks for itself. But we actually did an analysis at CFRA, and it's how inclusiveness boost profitability. And we did a ranking of what are the most inclusive brands within retail, and we actually found Nike to be among the top three inclusive brands. Specifically what we did is, we went on the retailer's digital site and we looked at the percentage of non-white models. Also how well this company would be marketing to plus sizes and different target demographics, and Nike was the standout

- OK. Interesting. Camilla, thank you so much. Camilla Yanushevsky, CFRA equity analyst talking us through Nike earnings, appreciate it.