The Beaverton, Ore.-based athletic apparel and accessories firm, which includes the Jordan and Converse brands, revealed quarterly earnings Monday after the market closed, improving on top and bottom lines thanks to strength in the Converse brand and Nike Inc.’s digital businesses. Company shares shot up about 3 percent in after-hours trading, as a result.
“Nike’s strong results this quarter provide further proof that our strategy is working, as we execute through a dynamic environment,” John Donahoe, Nike’s president and chief executive officer, said in a statement. “We are now in a much stronger competitive position today than we were 18 months ago. And I want to thank our roughly 75,000 global teammates for all their work to provide consumers with the compelling new product, innovation and experiences that only Nike can deliver.”
For the three-month period ending Nov. 30, total company revenues grew 1 percent to $11.3 billion, up from $11.2 billion the same time last year. Revenues in the Nike brand were flat, at about $10.8 billion, due to lower revenues in the wholesale business and continued shipping delays caused by the pandemic. But sales in Nike’s direct-to-consumer business helped offset losses, rising 9 percent during the quarter to $4.7 billion, while Nike brand digital sales grew 12 percent, led by 40 percent growth in North America. Forty percent of digital demand during the quarter came from Nike’s digital apps. In addition, Nike added more than 1,000 robots in distribution centers during the quarter to handle continued digital growth.
The Converse brand also served as a tailwind during the quarter, with brand revenues shooting up 16 percent on a currency-neutral basis to $557 million, led by strong performance across all channels in Europe and North America.
The company logged $1.3 billion in profits as a result, compared with $1.25 billion last year.
“Today, we’re stronger than we were before the pandemic,” Donahoe said on Monday evening’s call with analysts.
Nike didn’t offer an updated guidance, expect to reiterate last quarter’s guidance, anticipating full-year revenues to rise in the mid-single digits, compared with fiscal year 2021’s full-year revenues. Current-quarter revenues are also expected to rise in the mid-single digit range.
Matt Friend, executive vice president and chief financial officer at the firm said in a statement: “Our second-quarter results reflect our deep consumer connections, the continued strength of our brands and strong marketplace demand. As we navigate through short-term supply challenges, we are focused on executing our Consumer Direct Acceleration strategy to fuel our long-term financial outlook.”
The company added in a statement on Monday that lower inventory levels and pandemic-related factory closures in the Greater China and Asia Pacific and Latin American regions caused revenues to decline. But added that growth in North America, Europe, the Middle East and Africa helped offset losses.
“We expect the operating environment to remain volatile [with] supply significantly lagging consumer demand,” Friend said on the call. “However, Nike’s long-term opportunity is larger than ever. We remain focused on doing what we can control in the short term.
“We’re increasingly confident supply will normalize heading into fiscal year 2023,” he added. “Our guidance is reflective of what we see in the intermediate term.”
In addition, operating overhead expenses increased during the quarter, up 8 percent to $2.7 billion, thanks to added technology investments and wage-related increases. Nike ended the quarter with $9.4 billion in long-term debt and $10.7 billion in cash and cash equivalents. Earlier in the month, Nike purchased digital shoe company RTFKT.
Shares of Nike, which closed down 2.64 percent Monday to $157.10, are up about 9 percent, year-over-year.