NKE – COOPER GENERAL NEWS

A man walks in front of a Nike product display in New York City on February 22, 2021.

John Smith | Corbis News | Getty Images

Nike reported higher third-quarter earnings on Thursday, despite widespread port congestion in the US and ongoing store closings in Europe hurt sales growth.

While the global health crisis still leaves an overhang of uncertainty, Nike expects the lockdowns in Europe to ease next month and delivery times in North America to slowly improve as the year progresses.

Shares fell more than 2% in after-hours trading.

Here’s how Nike performed in the quarter ended February 28, compared to analyst expectations based on a survey by Refinitiv:

Earnings per share: 90 cents compared to 76 cents expected
Revenue: $ 10.36 billion versus $ 11.02 billion expected

Nike reported net income of $ 1.45 billion, or 90 cents per share, compared to $ 847 million, or 53 cents per share, last year. That was better than the 76 cents per share analysts had expected based on refinitive data.

Total revenue increased from $ 10.1 billion a year ago to $ 10.36 billion. That was less than the $ 11.02 billion forecast by analysts.

In North America, sales were down 10% year-over-year, negatively impacted by shipping delays, which Nike said has lasted for more than three weeks. It also meant that sales at its wholesale partners were affected as businesses like department stores and sporting goods stores did not receive goods on time. They likely need to discount some of these goods now to make shelf space for more styles in season.

Residues at West Coast ports, a global shortage of containers and a shortage of truck drivers in the US continue to be a headache for companies from Nordstrom to Urban Outfitters to Peloton. Many have said that they expect these problems to drag on into the second half of the year.

In the Europe, Middle East and Africa region, Nike announced that brick and mortar retail sales had declined due to closings and restrictions related to pandemics, while digital sales in those markets had increased 60% recently. It is said that around 60% of shops in the area are open today, with some operating at reduced hours.

In Greater China, a region still recovering from the pandemic, sales rose 51%.

Nike provided an outlook for the current quarter and fiscal year that is expected to slowly improve inventory run times in North America from here and ease lockdowns across Europe from April.

For fiscal year 2021, sales are forecast to increase by a low to medium teenage percentage compared to the previous year. According to Refinitiv, analysts had called for sales growth of 15.9% for the full year.

The company expects its fourth quarter revenue to grow 75% year over year as the company expires a period of time where 90% of its own stores have closed due to the pandemic. Analysts had targeted a growth of 64.3%.

Online sales are promoted through live streaming

Nike’s direct customer business grew 20% year over year to $ 4 billion. And Nike brand online sales rose 59% as consumers wanted to update their wardrobes with new sneakers and sportswear, even if they were stuck at home. The company said it had $ 1 billion in online sales in North America for the first time.

“We continue to see the value of a more direct, digitally-enabled strategy that will give Nike even more potential over the long term,” said CFO Matt Friend.

Nike’s e-commerce business is still on track to generate at least 50% of sales in the years to come. Nike has invested more in digital media, including its popular SNKRS app, to reach younger consumers online and reduce reliance on third-party vendors.

It was also said that it recently had success in testing new live streaming formats that are still more popular in Asia than the US. But in America too, more companies like Nordstrom and Walmart are experimenting. In the third quarter, Nike announced that it had started live streaming in Japan, Germany and Italy.

“We’re seeing phenomenal commitment to this live interaction with the average viewership doubling,” said CEO John Donahoe.

Nike stock is up more than 110% in the past 12 months at Thursday’s close. It has a market capitalization of more than $ 225 billion.

The full press release from Nike can be found here.

Nike reported quarterly sales and earnings on Friday that exceeded analyst estimates. This is due to triple-digit online growth in North America and strong Chinese consumer demand for sneakers and workout clothing.

Due to the pandemic, costs could be reduced as less marketing spending was made at sporting events. The lower costs increased profitability. Strong sales during Alibaba’s Single’s Day in China and Black Friday in the US helped it kick off the holiday season with stock shortages, reducing the need for discounts.

“These are the times when strong brands are getting stronger,” said CEO John Donahoe during a conference call on the results. “Constant changes in the direction of digital, sporty clothing as well as health and wellness continue to offer us incredible opportunities.”

Its stocks jumped more than 4% in trade outside of business hours.

Here’s how the company performed in the second quarter of the fiscal year compared to analyst expectations based on refinitive data:

Earnings per share: 78 cents versus 62 cents, expected
Revenue: $ 11.24 billion versus $ 10.56 billion expected

For the three-month period ended November 30, Nike reported net income of $ 1.25 billion, or 78 cents per share, compared to $ 1.12 billion, or 70 cents per share, last year. Analysts had demanded a profit of 68 cents per share.

Revenue increased 9% year over year to $ 11.24 billion from $ 10.33 billion last year. That was better than what analysts had expected to be $ 10.56 billion.

According to Nike, digital sales for its eponymous brand rose 84% in the quarter as more shoppers visited the site to purchase sportswear and shoes to help maintain their fitness routines and personal health during the pandemic. This has helped to compensate for declines in wholesale partners and in the company’s own brick and mortar stores, as the global health crisis made fewer people feel good when they left their homes to shop.

Sales for the Converse brand, owned by Nike, declined 1% in the second quarter. According to Nike, thanks to the introduction of yoga and plus sizes, the women’s category has grown faster than business as a whole.

In Greater China, Nike sales grew 24%, compared to just 1% year-over-year growth in North America.

With domestic turf sales stagnating, Nike has doubled in the Chinese market, viewing the region as a key growth opportunity for the brand. Over the summer, a new type of store called Nike Rise opened in a mall in Guangzhou, hosting local meetups for mobile app users.

According to Nike, more than 4 million new customers bought their products during Singles Day, a shopping event hosted by Chinese e-commerce giant Alibaba. Overall, Nike achieved online sales of over half a billion dollars on Singles Day on November 11th.

The retailer also said it had “record” sales online during the week of Black Friday in the US but did not disclose the amount.

Nike stands alongside Lululemon, Dick’s Sporting Goods, and other retailers selling exercise gear and exercise equipment that have recovered faster this year. Other clothing retailers, especially those that deal with workwear and dresses, have problems.

Still, pedestrian traffic in stores in North America, Europe, and Latin America is down year-over-year due to social distancing measures. However, customers who venture into stores are more likely to buy, which increases conversion rates. Ninety percent of the stores are open, but some have reduced hours.

At the close of the market on Friday, Nike shares were up more than 37% this year. The company has a market capitalization of $ 215.5 billion.

The full press release on Nike’s earnings can be found here.