Nike beat analysts’ revenue expectations for its first fiscal quarter by more than $1 billion Tuesday, signaling the sportswear giant is making a healthy comeback from the pandemic.
The company reported diluted earnings per share of $0.95 for the three months ended August 31. Revenue was $10.6 billion, down 1% year-over-year. Wall Street analysts had projected earnings per share of $0.47 on revenue of $9.14 billion, according to Refinitiv estimates.
Nike (NKE)’s stock jumped more than 8% in after-hours trading Tuesday following the report.
Many footwear and apparel companies, including Nike, were hit by store closures and a decline in in-store shopping earlier in the year. In the quarter ended May 31, Nike posted a net loss and 38% decline in revenue.
In the latest quarter, however, Nike said that nearly all of its stores were open, though foot traffic is still lower than usual.
Nike’s investments in digital sales significantly boosted sales in the latest quarter.
In recent years, the company has shifted its focus from selling through third-party retailers to leaning on its own direct-to-consumer sales channels and e-commerce business, which positioned it to benefit as more consumers have turned to buying online.
The company said its Nike Brand digital sales grew 82% during the quarter, including triple-digit growth in the Europe, Middle East and Africa market.
Overall, revenue has returned to growth in the Europe, Middle East and Africa and Greater China markets. Sales in Asia Pacific and Latin America dropped 18%, and North American sales fell just 2% from the same period in the prior year, a significant improvement from the 46% year-over-year decline in the market in the previous quarter.
“Nike is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand,” Nike CFO Matt Friend said in a release.
Nike’s digital platforms and sales experienced strong growth in the quarter, even as its physical stores reopened.
Friend said on a call with analysts Tuesday that demand on the Nike app jumped 150% during the quarter. And CEO John Donahoe said there was triple-digit growth in mobile active users on the company’s e-commerce apps, as well as strong demand for Nike’s Run app, which provides digital workouts.
Donahoe added that consumers are also increasingly identifying themselves as Nike app members when they check out at brick-and-mortar retail stores, which means the company can link that purchase to the consumer’s other shopping data.
That engagement is key, he said, because “we know a consumer who connects with us on two or more platforms has a lifetime value that’s four times higher than those who don’t … and we’ll use data to help us stay a step ahead.”
Nike is also likely to benefit from the return of live sports, which are a key marketing opportunity for the footwear giant.
While the company acknowledged the continued uncertainty from the ongoing pandemic, Friend said on the call that Nike now projects full-year fiscal 2021 revenue to be up in the high single digits to low double digits compared to the prior year.