Nike (NKE) studies a success in earnings within the fourth quarter of 2021
Nike on Thursday reported fourth quarter earnings and sales that exceeded analyst estimates, fueled by record earnings in its largest market, North America.
It also offered a better-than-expected sales outlook for the year ahead, fueled by optimism about the women’s category, the apparel store, and the Jordan brand.
Nike continues to benefit from consumers looking for comfortable clothing for both exercise and at home. Even as people return to schools, offices, and other social facilities, many are still looking for more relaxed options like sneakers and stretchy pants.
Nike also saw a boost to its wholesale business – something that was largely inactive a year earlier during the Covid pandemic, when malls and department stores had to temporarily close their doors and pause orders for goods. Nike’s top wholesale partners include Dick’s Sporting Goods, Foot Locker and JD Sports.
Nike shares rose more than 12% in after-hours trading.
Here’s how the company performed in the fourth fiscal quarter compared to analysts’ expectations using refinitive estimates:
- Earnings per share: 93 cents vs. 51 cents expected
- Revenue: $ 12.34 billion versus $ 11.01 billion expected
Nike net income for the May 31st period rose to $ 1.5 billion, or 93 cents per share, compared to a loss of $ 790 million, or 51 cents per share, last year. That exceeded analysts’ forecast of 51 cents per share, based on refinitive data.
Total revenue rose to $ 12.34 billion from $ 6.31 billion a year ago, beating estimates of $ 11.01 billion. The sale was helped by the company selling more goods at full price and less reliance on discounts.
In North America, Nike’s largest market, sales more than doubled to a record $ 5.38 billion as the company soared from a year earlier, when retailers were hit hardest by the Covid pandemic. Sales in the region increased 29% on a two-year basis.
In Greater China, sales rose only 17% to $ 1.93 billion. As one of Nike’s fastest growing markets, consumers in China have threatened a boycott after some Western brands like Nike raised concerns over allegations of forced labor in Xinjiang.
Management said Thursday that Nike is seeing improvement in China month after month.
“Building on our 40-year history in Greater China, we continue to invest in providing consumers with the best products Nike has to offer in locally relevant ways,” said CFO Matt Friend during a conference call following the win.
Digital sales increased 41% year-over-year and 147% year-over-year.
The company said its membership model will help boost its e-commerce business. Online purchases by Nike members, the first to gain access to exclusive products and other perks, hit a record $ 3 billion in the fourth quarter. According to its own statements, Nike now has more than 300 million members worldwide.
“Driven by our momentum, we continue to invest in innovation and our digital leadership position to lay the foundation for Nike’s long-term growth,” said Nike CEO John Donahoe.
For fiscal year 2022, Nike expects sales to grow in the low double-digit percentage range to over 50 billion US dollars. Analysts expected annual sales of 48.5 billion US dollars.
The company expects the first half to grow faster than the second half, said Friend.
“It’s important to note that as our business normalizes after the pandemic and the market continues to reshape, we don’t expect quarter-to-quarter linear growth,” he said.
Nike also anticipates delays in the supply chain and higher logistics costs, which will persist through much of fiscal 2022. The headache has plagued much of the retail industry for months. A shortage of containers and a shortage of truck drivers have, among other things, resulted in goods being blocked from the port to the warehouses to the houses of the buyers.
Nike stocks are down more than 5% since the start of the year. The company has a market capitalization of $ 211 billion.
See Nike’s full press release on the results here.