After two consecutive quarters of pandemic-related sales declines, Nike is back on track for growth.
Nike, the world’s largest sporting goods company, continues to benefit from booming sales online amid the Corona pandemic. In the second fiscal quarter to the end of November, net income increased by twelve percent year-on-year to 1.3 billion dollars (1.1 billion euros), as the adidas rival announced on Friday after the US stock exchange closed. Revenue climbed nine percent overall to 11.2 billion dollars, driven by an 84 percent increase in online business. Nike earned $1.25 billion on the bottom line. Earnings per share rose to 78 from 70 cents. Analysts had consensus estimates for revenue of $10.55 billion and earnings per share of 63 cents, according to Factset.
Nike posted gains in all regions. The growth driver, however, was the China business, which increased by 24 percent; adjusted for currency effects, the increase was 19 percent. In the process, China reached the 2 billion dollar mark in a quarter for the first time. In the Europe/Middle East/Africa region, sales increased by 12 percent after adjusting for foreign exchange. In North America, however, sales increased by only 1 percent.
The company raised its sales forecast for the current fiscal year. Nike now expects growth of around 13 to 15 percent. Previously, the sports manufacturer had assumed a revenue increase in the high single-digit to low double-digit percentage range. Nike referred to the dynamic situation in connection with the Corona pandemic. For example, it said, there are new restrictions imposed by governments in parts of the U.S. and Europe. Nike would therefore continue to act cautiously in building up inventories. Gross margin expectations also improved.
U.S. bank JPMorgan raised its price target for Nike from $146 to $170 after the strong numbers. The rating was left at “Overweight”. The Adidas competitor has performed better than expected, wrote analyst Matthew Boss in a study presented on Saturday.