Nike Stock Price Soars As Online Sales Jump 82% During Coronavirus Pandemic

A stronger than expected earnings beat and positive future growth projections propelled Nike's stock 13% higher in extended trading Tuesday to $132.15. Nike's stock ended regular trading at $116.95 after opening at $113.10.

The catalyst for the unexpectedly strong NYSE bump was the company's better-than-expected earnings report for first quarter fiscal year 2021, which ended Aug. 31. Nike revealed Q1 revenue slid only 0.6% to $10.59 billion from $10.66 billion year-on-year. The Q1 total outperformed the $9.15 billion predicted by analysts.

The total revenue drop, however, might have been much worse if the company's digital sales hadn't picked up the slack in an economy devastated by the COVID-19 pandemic. Nike Brand digital sales skyrocketed 82% with double-digit jumps in North America and Greater China.

Sales from all sources in China improved 6%, enough to offset a 2% reduction in North America revenues. However, North America remains Nike's strongest market. Direct sales soared 12% to $3.7 billion across all global regions.

Q1 net income climbed to $1.52 billion ($0.95 per share) from $1.37 billion ($0.86 per share) year-on-year. The Q1 result was far better than the $0.47 per share estimated by analysts.

“Our results this quarter continue to demonstrate Nike’s full competitive advantage, as we strengthen our position in the midst of disruption,” said president and CEO John Donahoe.

“In this dynamic environment, no one can match our pace of launching innovative product and our brand’s deep connection to consumers," he added. "These strengths, coupled with our digital acceleration, are unlocking Nike’s long-term market potential."

Donahoe said digital is Nike's new normal. He pointed out today's consumer is digitally grounded and won't revert back to brick and mortar shopping.

The Q1 results are a significant improvement over the Q4 2020 report (March-May), during the first COVID-19 wave in the U.S. Nike reported a 38% plunge in revenues in June year-over-year as its stores remained closed due to social distancing restrictions. It said most of its stores reopened in Q1.

Inventory rose 15% year-on-year but decreased 9% in Q1 compared to Q4.

“Nike is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand,” said CFO Matt Friend.

Friend said for the first half of fiscal 2021, Nike expects revenue will be roughly flat compared to 2019. However, he expects demand to improve in the latter part of the current fiscal year.