Nike, the always trendy sports brand, posted a solid quarterly profit as their online sales of sneakers and workout apparels grow as the pandemic restrictions loosen.
The current largest sports apparel maker, Nike, reported that they achieved a net profit of $1.5 billion profit, or 95 cents per share, in the three-month period ending Aug. 31. The report circulated on Tuesday claims that the profits went up by 11% from the same 2019 quarter.
Wall Street analysts from FactSet estimated that the Nike stocks might rise up to 45 cents a share. However, the release of the data from the company where they showed the share price to be 95 cents a share was well above all expectations. Nike stocks were found to surge 13 percent in after-hours trading after the company revealed the news.
In the last quarter that ended on May 31, the company reported a loss, with its revenue falling 38%. The loss was mainly due to the widespread COViD-19 pandemic that put most of the world in a state of lockdown. Although the company thought that their online sales would make up for their losses from the physical stores, it was not happening.
As the countries around the globe relaxed their lockdowns and most went to unlock phases, the company’s online sales picked up. This rebound was mainly due to the fact that the Beaverton, Oregon-based company has always been popular with their online shoppers.
Nike reported that their digital sales rose by 82%, in the last quarter, helping offset declines in its wholesale business and Nike-owned stores.
The company also earned profit as the kit sales went off as a new season of several sports were commenced. In the Premier League, Arsenal overtook Liverpool to become the most popular kit in England this season, as the sales reports show.
Liverpool winning the league in the previous season, saw their kit to be most popular last season. However, this time, although they bagged the English Premier League, they stand at third place in the podium. An 84 percent increase in demand for Chelsea’s 20/21 home jersey has seen the Londoners move up to second as the league defenders are in the third position.
Although analysts expected revenue to be $ 9.2 billion, the club reported that their revenue was steady at $10.6 billion, recording a 1% decline from the previous year. Sales of the company, in China, rose 6% while North America sales fell 2%, as more than 20% declines in apparel and equipment sales were more than the growth recorded in footwear. Sales were also reported to grow in major markets like Japan, South Korea, and the UK.
At the current time, most online stores of the company are open as most countries have lifted the lockdown. The company, however, still finds that the coronavirus pandemic has reduced store traffic, hurting their physical sales. The company said shipping costs and promotions aimed at reducing inventory continued to eat at margins but order cancellations fell.
Nike also made several strategic changes to uplift their online game. They took up a direct-to-consumer online strategy amid the pandemic, leveraging its workout app to drive digital sales. Online sales now make up at least 30% of its revenue.
Nike CEO John Donahoe said in a statement, “Our results this quarter continue to demonstrate Nike’s full competitive advantage, as we strengthen our position in the midst of disruption. In this dynamic environment, no one can match our pace of launching innovative products and our brand’s deep connection to consumers. These strengths, coupled with our digital acceleration, are unlocking Nike’s long-term market potential.”
He also indicated that this shift to online sales might be a permanent trend. “We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back,” he added.
Their all-time rivals Adidas also reported a growth in sales. Yoga pant maker Lululemon also recorded a sales boost of 157 percent in its online business.