Nike Shares Rise by 13%

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With lockdowns easing and intensified vaccination drives, Nike Inc. is seeing better numbers as its shares rose to 13%. Additionally, quarterly earnings and revenue are poised to be better than expected.

The loosening quarantine protocols have driven up forecasts for online sales in their most significant markets. Apart from that, their tried-and-tested formula of limiting stocks for popular products has also brought in an extra push in sales. Nike Inc.’s sales doubled this year. The multi-billion-dollar sports company reported on Thursday their fiscal full-year sales earlier than Wall Street estimates. According to IBES data from Refinitv, the shoemaker recorded total revenue of $12.34 billion. Meanwhile, it only had $6.31 billion last year due to the pandemic peaking at the time, thus forcing Nike to close stores and endure a sharp decline in their stocks. Furthermore, this year’s revenues exceeded analysts’ predictions of $11 billion and earnings of 51 cents per share. 

Nike Inc. hauled in a profit of $1.51 billion in the quarter ending on May 31, at 93 cents per share. A year ago, the company logged a loss of $790 million, or 51 cents per share. Furthermore, the sneaker giant’s direct sales skyrocketed to 73% ($4.5 billion) this year. 

Professional sports is also one thing that has boosted Nike’s standing in the market. According to Chief Financial Officer Matthew Friend, acceleration in the sports performance business has begun as consumers finally hit the gym and track. After being stuck at home for over a year, customers traded comfortable pajamas and leisurewear for sneakers and sports clothing. With higher revenues, Nike could offset their lucrative marketing tactics as major sporting events such as the NBA playoffs and Euro 2020 kicked off the post-pandemic sporting season. 

“We’re proud that more goals have been scored using Nike boots than all the others combined,” said Chief Executive John Donahoe during an earnings conference call.

The Beaverton, Oregon-based company posted fourth-quarter revenue of $5.38 billion in North America, their biggest market. Moreover, it eclipsed the average estimate of $4.31 billion. Nike also experienced a notable jump in sales from regions of Europe, the Middle East, and Africa. However, the sports company only scored revenue of $1.93 billion in China, its fastest-growing market. It was expected that the company would cross the $2.22 billion mark. Still, Nike and other competitors, like Adidas and H&M, suffered a controversy on Chinese social media after news of forced labor in Xinjiang emerged. 

According to Refinitiv, analysts predicted revenue of $48.46 billion for the fiscal year 2022. However, Nike Inc. is expecting that it will amass a gain of more than $50 billion. Additionally, the sports giant’s revenue is anticipated to grow by low double digits. “First-half growth is expected to be slightly higher than second-half growth,” Friend said.

Nike executives have been proactive in reinforcing the performance of the company through fiscal 2025. The executives have convened and outlined a plan through 2025, targeting annual sales to reach low double digits growth instead of the typical high single-digit.

The gross margin for the fourth quarter rose to 45.8%, an increase of 850 basis points. The company’s direct-to-consumer business and fewer charges regarding factory cancellations likely played a part in this boost. According to Refinitiv, analysts were expecting a gross margin of only 43.96%.

To know more about the revenues and sales of Nike, visit their Investors website.

References

https://investors.nike.com/investors/news-events-and-reports/investor-news/investor-news-details/2021/NIKE-Inc.-Reports-Fiscal-2021-Fourth-Quarter-and-Full-Year-Results/default.aspx

https://finance.yahoo.com/news/nike-revenue-beats-upbeat-north-204006747.html

https://news.abs-cbn.com/business/06/25/21/nike-shares-surge-return-pro-sports

https://finance.yahoo.com/quote/NKE/

https://www.wsj.com/livecoverage/stock-market-news-live-updates-062421/card/Wa7oNBR8o9pDkU2sJ2DY

James Blunt

James Blunt is an Economics Journalist. He is well-equipped with research and investigation. For the past 8 years, he has been covering all economic and personal finance-related content that identifies with and topically relates to businesses' vision/target demographic.

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