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Nike trips up over software implementation

Arlene Martin
Sports footwear giant Nike has posted lower than expected sales figures following the botched implementation of a $400m (£277.5m) supply chain management system from i2 Technologies.

Arlene Martin

Nike expects sales revenue for the third quarter ending 28 February 2001 to be between $80m and $100m below target. The company admitted that software problems and slowing US demand were to blame.

Don Blair, Nike's chief financial officer, said the unanticipated implementation problems would contribute to a reduction in forecast earnings from $0.50 to $0.55 per share down to $0.34 to $0.38 per share.

He added, "Supply chain issues resulted in significant amounts of excess inventory in some footwear models, while other models have been in short supply or delivered late. As a result, our third-quarter revenues will be down significantly and our margins will suffer from the higher discounts and air freight costs necessary to move the excess inventory through our system."

Nike chairman, Phillip Knight, said the company's supply chain problems would soon be resolved: "I think that the shortfall for this quarter is basically a one time occurrence. We have another 12 months to implement this supply chain around the world and we need to be very alert, but I don't think this specific problem will occur again."

When asked about the nature of the difficulties, i2 Technologies declined to comment.


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