The Beaverton, Ore.-based athletic apparel and accessories group revealed quarterly earnings Friday afternoon, improving on both top and bottom lines, led by strength online and in China. Shares shot up more than 5 percent in after-hours trading as a result.
“Nike’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, president and chief executive officer of Nike. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working and we are excited for what’s ahead.”
That strategy includes total company revenues of more than $11.2 billion, compared with $10.3 billion the same time last year. Nike logged $1.2 billion in profits for the three-month period ending Nov. 30 as a result, up from $1.1 billion a year ago. That’s on top of $1.5 billion in profits the previous quarter.
“With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management,” Matt Friend, executive vice president and chief financial officer of Nike, said in a statement. “As we look ahead, we are focused on moving even faster against our strategic vision of consumer direct acceleration and fueling sustainable, long-term growth and profitability.”
Donahoe pointed out on Friday evening’s conference call with analysts that last quarter was the company’s third straight quarter of roughly 80 percent digital growth. Nike was also the number-one sports brand on Tmall during last month’s Singles’ Day, helping attract more than 4 million new members and half a billion dollars in digital demand.
“The consumer shift to digital is permanent,” Donahoe said. “Digital is now woven into everything we do as a company.”
The strength online helped offset declines in the company’s wholesale business and Nike stores, many of which had reduced foot traffic as coronavirus cases continue to rise around the nation.
As of Friday, more than 90 percent of Nike’s company-owned stores are open, some with reduced operating hours.
Operating expenses rose 4 percent during the quarter to $2.5 billion, driven by about $135 million in investments in digital and restructuring-related costs. In November, Nike upped its planned job cuts from 500 to 700 people in the Portland, Ore., headquarters.
Nike ended the quarter with $8.6 billion in cash and equivalents and $9.4 billion in long-term debt. Shares of Nike, which closed down 2.29 percent to $137.28 a piece Friday, are up 35.7 percent year-over-year.
“We believe Nike is best equipped to manage through the COVID-19 crisis with no damage to its brand equity and with an eye toward returning to a healthy pull market environment in nine to 12 months, just in time for key sporting events to resume,” Camilo Lyon, an analyst at BTIG, wrote in a note. “The net result of this should manifest in incremental market share gains for Nike, further distancing it from the competition.”