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Topline
Shares of sportswear retailer Nike rose nearly 10% on Wednesday, a day after the company reported financial results that crushed expectations thanks to burgeoning online business during the coronavirus pandemic.
Nike’s digital sales were up 82% last quarter, even as many of its stores reopened.
Key facts
Even when many of its stores reopened, Nike saw an 82% digital sales increase in the latest quarter as a record number of customers flocked to its website and app to shop for sneakers and sportswear.
The company reported revenue of $ 10.6 billion, crushing analyst expectations of just $ 9.15 billion, with earnings of 95 cents a share (versus 47 cents expected).
Nike said sales received a boost as parents stocked up on back-to-school items, while its women’s clothing division grew nearly 200% and business also rebounded in key markets like China.
Nike, which has already been shifting more of its business to digital, dramatically accelerated that process during the pandemic, cutting out department stores and other outlets in favor of regional collection centers for online ordering.
Before the coronavirus crisis broke out, Nike was aiming for its e-commerce sales to represent 30% of total revenue by 2023, but the company has already surpassed it, now on track to break 50% in the next few years. .
Nike’s shares are up nearly 15% so far in 2020, currently trading at around $ 127 a share, and the company has a market capitalization of around $ 180 billion.
Crucial appointment
“The accelerated consumer shift to digital is here to stay,” Nike CEO John Donahoe said in the company’s press release. “Digital is driving the way we create the future of retail.” He added that Nike’s digital transformation strategy “cannot be easily replicated” and that “simply put, scale matters and Nike leads.”
What to watch
“We know that digital is the new normal. Today’s consumer is connected to digital ground and it just won’t reverse, ”Donahoe said during the company’s earnings call. Nike and its peers are benefiting from the accelerated shift to e-commerce, with many other sports brands and retailers, including Lululemon, Dick’s Sporting Goods and Peloton, also reporting optimistic results in recent weeks. Lululemon, for example, has also seen its digital business take off, with online sales increasing 157% in the last quarter.
Key Background
Nike’s latest results mark a strong rally from its previous earnings report a quarter earlier. At the end of June, affected by the temporary closure of stores during the pandemic, Nike recorded an unexpected loss of $ 790 million, with a drop in revenue of 38% compared to the previous year. Looking ahead, Nike issued optimistic guidance for the remainder of the fiscal year in 2021, at a time when many of its rivals are avoiding forecasts entirely. Nike expects sales to rise to high single digits next year, with demand picking up in the second half of 2021.
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