A greater demand for sportswear and its strength in the digital space led Nike Inc. to a better-than-expected second quarter.
At market close on Friday, the athletic apparel and footwear behemoth reported earnings of 78 cents per share for the three months ended Nov. 30, compared with the prior year’s EPS of 70 cents. Revenues climbed 9% to $11.2 billion.
The financial results trounced analysts’ bets of 62 cents in earnings per share and revenues of $10.56 billion. As of 4:30 p.m. ET, NKE shares were up 3% to nearly $143. In the year to date, its stock has risen about 35%.
“Nike’s strong results during a dynamic environment show the power of staying on the offense,” president and CEO John Donahoe said in a statement. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”
According to the Beaverton, Ore.-based company, sales for the Nike brand rose 8% to $10.7 billion — driven by double-digit improvement in Nike Direct plus growth in the sportswear category and Jordan Brand, while slightly impacted by a mid-single-digit drop in its wholesale business.
Sales for Converse, on the other hand, fell 4% to $476 million as double-digit gains in digital and advancements in Asia were more than offset by a downturn in Europe and North America.
The surge in COVID-19 cases in certain parts of the United States, as well as countries including France, Germany and the United Kingdom, prompted renewed lockdowns that have led to another round of temporary store closures. Today, more than 90% of Nike’s owned stores are back in business, with some operating on reduced hours. Although it continues to experience year-over-year declines in physical retail traffic, the company has recorded higher conversion rates at its brick-and-mortar locations.
“With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management” added EVP and CFO Matt Friend. “As we look ahead, we are focused on moving even faster against our strategic vision of Consumer Direct Acceleration and fueling sustainable, long-term growth and profitability.”
At the end of November, Nike had $15.8 billion in total liquidity, including cash and equivalents, short-term investments and undrawn credit facilities. It did not provide an outlook for the fiscal year.
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