Nike Soars After Sales Beat Estimates and It Returns to Profit
Nike Inc. rallied in late trading after the world’s largest sportswear maker returned to profit and posted far better revenue than predicted, a sign it’s swiftly bouncing back from the pandemic slump.
- Revenue amounted to $10.6 billion in its fiscal first quarter, Nike said on Tuesday, compared with the $9.11 billion estimate of analysts. The company posted 95 cents a share in earnings, topping the 46-cent projection.
- Seemore details.
- Investors have been looking for fresh evidence that Nike is navigating the coronavirus crisis, especially after the retail slowdown led toa surprise loss in the previous quarter and hurt its margins. And that’s just what Nike delivered.
- Though sales didn’t grow — slipping about 1% from the year earlier — Wall Street was bracing for a far steeper decline. Nike also improved its margins more than expected.
- The company has stepped up efforts to sell more merchandise directly to consumers — an initiative that has led tojob cuts. Relying less on outside retailers stands to benefit Nike both during the recovery from Covid-19 and in the long run. Brick-and-mortar stores, especially ones in malls, were some of the hardest hit by the coronavirus.
- China is further along in its recovery, and sales there reflect that. They were up 6% for the quarter. The country was quicker to come out of lockdowns, and the government is pushing citizens to exercise more — a boon for sportswear.
- In North America, where the pandemic response has had varying success state by state, sales fell about 2%. The lack of sporting events has hurt demand for team-related apparel, though some leagues such as the NFL have returned with limited crowds or empty stadiums.
- The shares jumped as much as 9% to $127.39 in after-hours trading. They had been up 15% this year through the close.
- See analysts’ estimates.
- Read Nike’sstatement.
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