The sportswear giant Nike Inc forecast better than expected fiscal full-year sales as the company showed confidence on the prospects of its online business as well as higher demand with easing of lockdowns. The company is also banking on the tried-and-tested strategy of the company – that of limiting stocks of its popular products.
With the company posting posted better than expected earnings and revenue for its latest completed quarter, its stocks rose by almost 13 per cent.
Rapid vaccinations against Covid-19 in many markets is prompting consumers to get out and back to buying sneakers for running and hiking as was their routine, after consumers were forced to stay back at home for about one and half years because of the pandemic and thereby choosing only to purchase leisure-wear and comfortable pajamas.
According to the company’s Chief Financial Officer Matthew Friend, the company was optimistic and confident because of some definite reasons such as the return to sport. An acceleration in its sport performance business was already being witnessed by Nike, Friend added on an earnings call.
Its estimated revenue growth for the fiscal 2022 was expected to be in low double-digits and be greater than $50 billion, said the Beaverton, Oregon-based Nike. According to Refinitiv, analysts had expected revenue of $48.46 billion for fiscal 2022.
Friend said that the company expects growth in the first half to be higher than in the second half of the current fiscal.
The fourth quarter revenue of Nike more than doubled to $5.38 billion in North America, the company’s biggest market, and comfortably beat estimates of analysts $4.31 billion.
The company reported a 8.5 percentage points growth in total gross margin to 45.8 per cent year on year partly because of the company’s direct to consumer business and fewer charges related to factory cancellations. According to Refinitiv, analysts expected gross margin of 43.96 per cent year on year.
The company however missed revenue expectations for the Chinese market, an important market for the company, where it generated sales revenue of $1.93 billion while the market had expected revenue of $2.22 billion.
In March, a number of Western apparel brands including Nike, Adidas and H&M were severely attacked on Chinese social media following statements made by the companies on the use of forced labor in Xinjiang were found by China’s internet users.
Net income came in at $1.51 billion, or 93 cents per share, for the quarter ended May 31, compared with a loss of $790 million, or 51 cents per share, a year earlier.
The total revenue of the company for the period was almost double, at $12.34 billion, compared to a year ago when the Covid-19 pandemic was at its peak.
(Adapted from Investing.com)