Nike Inc. is still on its game.
Nike’s revenues increased 7 percent during the quarter ended Feb. 28 to $9.61 billion. A year earlier, the company posted losses of $921 million, fueled by changes to the tax code, and revenues of $8.98 billion.
“In Q3, our team once again drove strong, healthy growth across Nike’s complete portfolio,” said Mark Parker, chairman, president and chief executive officer. “Our business momentum is being accelerated by our ability to scale innovation at a faster pace and expand new digital consumer experiences around the world.”
Andy Campion, executive vice president and chief financial officer at Nike added that while momentum for the brand is strong across all regions, it was particularly strong in China.
A number of factors have contributed to Nike’s success, including the continuing enthusiasm of ath-leisure goods and the current sneaker obsession, product innovation in both apparel and footwear, cleaner inventories, less promotional activity, better margins in Nike’s direct-to-consumer business and a supply chain shortage at competitor Adidas.
Even a string of controversies hasn’t put a damper on the brand, including a number of discrimination cases alleging a toxic workplace.
Nike’s stock, which closed up 1.5 percent to $88.01 before the results were released Thursday afternoon, is up more than 36 percent over the past year.
“[Nike] has a long runaway ahead [with its] innovative sneaker platforms, across a wide swath of categories that should propel the company to further revenue growth and more importantly sustained [double digit earnings-per-share] growth,” said Paul Trussell, a research analyst at Deutsche Bank, in a recent research note. “We again firmly believe the strong and balanced shoe portfolio provides ample ammunition for sustained growth globally. … [And] we believe the company will drive solid full-price sell-through with the current product lineup.”
Deutsche Bank rated the stock a buy, set a price target of $90 and pointed out a few of the products favored by Nike shoppers, including the recently released Air Max 720, last year’s Element 55 and Element 87, Air Jordan 33, and the Adapt BB, the first power-lacing shoe built for basketball, which was released in February for $350.
Parker added that some of the latest Jordans sold an average of 300 times per second.
Foot Locker, which also recently released quarterly earnings, credited the demand for Nike as one of its biggest growth opportunities.
Meanwhile, activewear and ath-leisure apparel continues to grow — faster than footwear.
Sales of activewear apparel in the U.S. reached $54.7 billion last year. That’s a 10 percent growth rate year-over-year, compared with only a 6 percent growth rate in U.S. athletic footwear sales during the same period, according to the NPD Group’s Consumer Tracking Service. John Kernan of Cowen said in a recent note that Nike remains the consumer choice for activewear apparel, maintaining a sizable market share over competitors such as Adidas and Under Armour.
“Apparel is another outsize growth opportunity,” Parker told analysts on a conference call Thursday. “Over the next year we’ll continue accelerating growth by offering fresh options.”
That includes expanding the selection of women’s yoga pants and sports bras to include new styles and sizes.
“We don’t, however, take this constant demand for granted,” Parker said.
The company’s latest growth strategies include editing its selection to include only the strongest styles, increasing innovation and operational efficiency and improving the customer experience.
“What’s so exciting is that the more we invest in stronger digital capabilities, the more growth opportunities we uncover,” Parker said. “It gives us great confidence that we’ll be able to keep winning with consumers for years to come.”