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Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

GuruFocus.com
·2 min read

- By James Li

Shares of Nike Inc. (NYSE:NKE) increased over 4% in afternoon trading on the heels of reporting fiscal second-quarter earnings that smashed revenue and earnings estimates.

For the quarter ending Nov. 30, the Beaverton, Oregon-based sports apparel giant reported revenue of $11.2 billion, topping the Refinitiv estimate of $10.56 billion and up 9% from the prior-year quarter. Earnings of 78 cents per share topped the consensus estimate of 62 cents per share and increased 11% from the prior-year quarter.


Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat
Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

Company accelerates growth in digital sales and Greater China sales

Nike President and CEO John Donahoe said that the company's strong results during a "dynamic environment" underscores the power of "staying on the offense," with compelling innovative products and global brand momentum driving growth. Total revenue increased 7% on a currency-neutral basis despite the Covid-19 pandemic reducing foot traffic in stores around the globe.

Nike Brand digital sales increased 84% year over year, with triple-digit growth in the U.S. and double-digit growth in the European and Asian regions. Donahoe mentioned during the earnings call that that strong growth in digital sales reflected strong momentum in end-to-end digital transformation, highlighted by strong performance in sales during Black Friday.

Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat
Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

Greater China sales increased 24%, driven by strong performance during China's Nov. 11 Singles Day. Donahoe said that Nike was the top-selling brand among sports brands, with 4 million new members.

Stock rises in aftermarket trading

Shares of Nike traded around $143.96 in aftermarket trading, up approximately 4.8% from the closing price of $137.28. Despite this, the stock is significantly overvalued based on its price-to-GF Value of 1.56.

Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat
Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

GuruFocus ranks Nike's profitability 8 out of 10, driven by net margins and returns outperforming over 80% of global competitors, which include Under Armor Inc. (NYSE:UAA) and adidas AG (XTER:ADS).

Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat
Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

Gurus riding Nike's strong profitability include Ken Fisher (Trades, Portfolio), Spiros Segalas (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat
Nike Receives Christmas Boost on Fiscal 2nd-Quarter Earnings Beat

Disclosure: No positions.

Read more here:

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  • 5 Christmas Bargains in Warren Buffett's Portfolio



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This article first appeared on GuruFocus.