Nikes Momentum continues.
The Beaverton, Oregon-based sportswear and accessory company, which owns the Jordan and Converse brands, announced quarterly earnings after the market closed Thursday and improved sales in all regions with strength in all channels and a return to organized sporting events.
“Nike’s strong results this quarter are continuing evidence of our deep customer relationships, our relentless innovation pipeline and a digital advantage that drives our brand momentum,” said John Donahoe, President and Chief Executive Officer of Nike, in a statement. “We have the right playbook to manage macroeconomic dynamics as we create value through our tireless efforts to advance the future of sport.”
For the three month periodod ends August 31, increa16 percent to $ 12.2 billion, down from $ 10.5 billion last year.
Nike’s direct selling business rose 28 percent quarter-over-quarter to $ 4.7 billion thanks to the strength of Nike’s brick and mortar retail fleet, which surpassed pre-pandemic levels. Digital sales also rose 29 percent in the quarter. North American digital business grew the fastest – 43 percent in the quarter – compared to the first quarter of fiscal 2021.
Donahoe told analysts on Thursday night’s conference call that the company expects the majority of its revenue growth in fiscal 2022 to come from digital sales, but added that the company will continue to invest in brick and mortar retail.
“Online to offline is becoming second nature,” he said, referring to the halo effect e-commerce is creating in local communities. (An example are those two new small-format, digital-centric stores that Nike opened in Boston in August.)
The company booked $ 1.87 billion, compared to $ 1.5 billion at the same time last year.
“The changes in the market are in our favor,” Donahoe said on the call. “The conversion of consumers to digitization, which might have taken five years, now only takes two.”
By category, the largest increases in sales were in footwear, followed by apparel and then equipment.
Donahoe added that Opportunities for growth include kids’ and womenswear such as sports bras and yoga (Nike nearly quadrupled its yoga business in the past two years) and sustainability.
“Consumers are clearly responding to sustainability,” said the CEO. “We’re seeing strong sales at full price [in sustainable products]. “
Nike teamed up with singer and songwriter Billie Eilish to create two types of sustainable Air Jordan sneakers that start later this month. The retailer also launched the first Serena Williams Design Crew Collection earlier this month.
Nike LeBron 18 Low Limited-Edition “Space Jam: A New Legacy” shoes.
But investors were not satisfied. Shares fell more than 3 percent during Thursday’s after-hours trading after failing to meet analyst expectations and causing ongoing problems from the pandemic.
Donahoe acknowledged some headwinds he called “macro volatility” as the company continues to “navigate current supply chain issues.”
“We will focus on what we can control,” he said. “Nike does what it always does: play the offense.”
Nonetheless, Nike revised its full-year sales outlook downward as a result. The company now expects sales to be in the mid-single digits, up from previous estimates in the low double digits.
“Exclusively because of plant closures,” said Matt Friend, executive vice president and chief financial officer at Nike, on the call. “Long runtimes have already deteriorated in the last 90 days. The transit times have increased and almost doubled due to port congestion, rail congestion, delivery bottlenecks and labor shortages. Lost production weeks and longer runtimes will lead to short-term inventory problems in the next few quarters.
“And then there is Vietnam,” continued Friend. “That means that we have already lost 10 weeks of production time. This created a gap in the inventory flow that was originally supposed to be delivered in October. It will take us several months to start production again. “
Friend added that inventory shortages are likely to affect all regions, but added, “We believe these supply chain issues are temporary.”
The company ended the quarter with $ 9.4 billion in long-term debt and $ 13.7 billion in cash and short-term investments.
Nike shares, which closed Thursday 1.33 percent to $ 159.54, are up nearly 28 percent year-over-year.