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Nike completely smashed Wall Street estimates by delivering much better than expected results. The company’s digital sales approach has helped it outsmart its competitors and manage to stay alive during these tough times.
On Tuesday, September 22, American multinational and athletic footwear and apparel manufacturing giant Nike Inc (NYSE: NKE) reported a massive 82% jump in online sales which has positively influenced its shares price. The company looks to have tapped new opportunities to expand its digital business during the COVID-19 pandemic. In another surprise, the company’s women apparel division registered a 200% jump.
Wall Street had estimated earnings per share to fall by 47%. Also, the revenue expectations were 14% south. However, Nike managed to completely outperform and beat street estimates. Earnings per share grew 10% to 95 cents and revenue was down just 1% at $10.6 billion.
Nike Inc shares jumped 13% in extended trading on Tuesday. We can expect the early morning opening on Wednesday anywhere above $130 levels. At the time of writing, Nike shares are at $132.15.
Nike sales for Europe, Africa, and the Middle East continued to surge at 5% to $2.9 billion. The digital sales in this region registered a triple-digit-growth. China sales also contributed with 6% surge with Nike clocking $1.78 billion in revenue. On the other hand, the Asia Pacific and Latin America sales tanked 18% to $1.1 billion. Sales in North America also dropped 2% to $4.2 billion.
This is a strong comeback for the company after it reported a massive loss in Q2. During the June-ending quarter, Nike revenue dropped 38% YoY as the company announced the temporary closure of its stores during the lockdown.
Nike Updates Outlook for Fiscal 2021
With the latest numbers out, Nike has also updated its outlook for fiscal 2021. The company expects its 2021 sales to be higher single-digit or low double digital starting 2021. Well, we can say Nike’s strong performance comes at a time of major market when many of its competitors are struggling to make ends meet. During the earnings call, company CEO John Donahoe said:
“We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back. In this dynamic environment, no one can match our pace of launching innovative product and our brand’s deep connection to consumers”.
While a majority of the Nike stores are already open, Nike is still limiting people who can come to their store. It also said that when people visit their stores they days, they have higher intent of buying. Thus, many of its stores are registering high conversion rates to the number of footfalls.
Looking at the current scenario, the company said that it “continued to strategically manage excess inventory resulting from a significant number of door closures and lower wholesale shipments globally”. Speaking about the company’s overall restricting, CFO Matt Friend said:
“Nike is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand”.
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