Nike earnings and sales beat estimates as retailer books record revenue in North America
- Nike's fiscal fourth-quarter earnings and sales were fueled by record revenue in its largest market, North America.
- Digital sales were up 41% compared with the prior year, and rose 147% compared with the same period in 2019.
- Nike also saw a boost to its wholesale business — something that was largely inactive a year earlier during the Covid pandemic.
- It also offered a better-than-expected sales outlook for the upcoming year.
Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts' estimates, fueled by record revenue in its largest market, North America.
It also offered a better-than-expected sales outlook for the upcoming year, driven by optimism around its women's category, apparel business and Jordan brand.
Nike continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options such as 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 shopping malls and department stores had to temporarily shut their doors and put orders for merchandise on pause. Some of Nike's key wholesale partners include Dick's Sporting Goods, Foot Locker and JD Sports.
Nike shares jumped more than 12% in after-hours trading.
Here's how the company did during its fiscal fourth quarter, compared with what analysts were anticipating, using Refinitiv estimates:
- Earnings per share: 93 cents vs. 51 cents expected
- Revenue: $12.34 billion vs. $11.01 billion expected
Nike's net income for the period ended May 31 rose to $1.5 billion, or 93 cents per share, compared with a loss of $790 million, or 51 cents per share, a year earlier. That topped analysts' forecast of 51 cents per share, using Refinitiv data.
Total revenue rose to $12.34 billion from $6.31 billion a year earlier, topping estimates for $11.01 billion. Sales were aided by the company selling more goods at full price and relying less on markdowns.
In North America, Nike's biggest market, sales more than doubled to a record $5.38 billion as the company surged from a year earlier when the Covid pandemic was hitting the retail industry the hardest. The region's sales were up 29% on a two-year basis.
In Greater China, sales were up just 17% at $1.93 billion. Though China is typically one of the fastest-growing markets for Nike, consumers in China have threatened a boycott after some Western brands including Nike expressed concern about allegations of forced labor in Xinjiang.
Management said Thursday that Nike is seeing improvement in China sequentially month by month.
"Building on our 40-year history in Greater China, we continue to invest in serving consumers with the best products Nike has to offer in locally relevant ways," CFO Matt Friend said during a post-earnings conference call.
Digital sales were up 41% compared with the prior year and rose 147% compared with the same period in 2019.
The company said its membership model is helping to fuel its e-commerce business. Online purchases from Nike members, who receive first access to exclusive products and other perks, hit a record $3 billion during the fourth quarter. Nike said it now has more than 300 million members globally.
"Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike's long-term growth," said Nike CEO John Donahoe.
In fiscal 2022, Nike is expecting revenue to grow a low double-digit percentage, surpassing $50 billion. Analysts were looking for annual revenue of $48.5 billion.
The company anticipates the first half of the year to grow faster than the second half, Friend said.
"It's important to note as we normalize our post-pandemic business and continue to reshape the marketplace, we do not expect quarter-by-quarter growth to be linear," he said.
Nike also anticipates supply chain delays and higher logistics costs will persist throughout much of fiscal 2022. The headaches have been plaguing much of the retail industry for months now. A shortage of containers and a dearth of truck drivers, among other factors, have stalled merchandise from getting from ports to warehouses to shoppers' homes.
Nike shares are down more than 5% year to date. The company has a market cap of $211 billion.