Nike shares hit all-time high as new products drive sales, earnings top expectations

Key Points
  • Nike's first quarter earnings for fiscal 2020 beat analysts' estimates.
  • The company says new products and investments in e-commerce are helping boost results.
  • Sales in North America climbed 4%, while those in Greater China were up 27% during the period.
Nike shares hit all-time high after reporting strong earnings and global growth
Nike shares hit all-time high after reporting strong earnings and global growth

Nike's fiscal first quarter earnings and sales topped analysts' expectations, as investments to sell more sneakers and apparel in its stores and on its website showed signs of paying off.

Its shares rose more than 5.5% in after-hours trading on the news, topping its previous all-time high of $90.

Here's how the company did for the first quarter in fiscal 2020 compared with what analysts were expecting, based on a poll by Refinitiv:

  • Earnings per share: 86 cents vs. 70 cents expected
  • Revenue: $10.66 billion vs. $10.44 billion expected

CEO Mark Parker said that product innovation, like a new Joyride running shoe, and a stronger e-commerce business helped boost results. During a call with analysts, he said online sales were up 42% during the quarter, while Nike's women's business grew at a double-digit clip. Nike has vowed to do a better job at making gear for female shoppers, and it hopes efforts like working with tennis champion Serena Williams as an ambassador will help.

Parker also said Nike had its biggest back-to-school season ever for kids, on the heels of it launching a subscription box for children's sneakers.

Net income for the quarter ended Aug. 31 climbed to $1.37 billion, or 86 cents a share, from $1.09 billion, or 67 cents per share, a year ago. That was better than expectations of 70 cents reported by Refinitiv.

Revenue was up 7.2% to $10.66 billion from $9.95 billion a year ago, topping expectations for $10.44 billion.

The company said sales in North America were up 4%, excluding any currency changes, while those in Greater China surged 27%.

Despite trade headwinds, Nike has still managed to keep a strong footing in China and has actually doubled down on the region, opening its first House of Innovation store, which sells one-of-a-kind merchandise and personalized gear, in Shanghai last year.

During the latest quarter, Nike said footwear sales for its namesake brand were up 11%, equipment sales were up 11% and apparel sales climbed 9% overall. Sales at Converse rose 8%.

Nike said gross margins grew to 45.7%, as the company has been selling more items at full price. Part of its strategy, known as "Nike Direct," has been to sell more in its own stores and website versus in discounted outlets. But it still keeps key relationships with retailers like Foot Locker, Nordstrom and Dick's Sporting Goods.

Nike shares, as of Tuesday's market close, have climbed more than 17% this year. The stock had closed the day down about 0.6%.

For the current fiscal year, analysts are calling for Nike to report earnings per share in a range of $2.73 to $3.00, on sales of $42.09 billion.

Nike said Tuesday it expects revenue growth for the year to be up a high-single-digit range, slightly topping sales growth in fiscal 2019.

"I think there is an expectation the numbers get better from here," Liz Dunn, founder and CEO of Pro4ma, told CNBC Tuesday evening. She said that's especially the case as Nike heads into the 2020 Summer Olympics in Tokyo.

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