Nike posts surprise earnings growth on lower costs, strong digital demand

[BENGALURU] Nike on Friday reported surprise quarterly profit growth and beat sales estimates, as it slashed costs and benefitted from people buying more shoes and clothes online to exercise outdoors due to Covid-19.

Shares of the world's largest sportswear maker were up 4.5 per cent in trading after the bell. They have gained about 37 per cent this year.

The global health crisis has pushed people to take up activities such as running or biking, giving a much needed boost to Nike and other sportswear makers after they took a hit to sales earlier in the year.

Beaverton, Oregon-based Nike said digital sales jumped 84 per cent, with triple-digit growth in North America - its biggest market - and strong double-digit increases in other parts of the world.

Consumers under lockdown have been logging into Nike's workout and store apps en masse, driving significantly higher online sales all year.

The time Nike has invested in its e-commerce channels has paid off and given it a big competitive edge over rivals like Adidas, said Jessica Ramirez, retail analyst at Jane Hali & Associates.

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"Nike's website is promptly updated and easy to browse, its app is intuitive and its focus on gathering customer data through its various services has really helped it target the right consumers at a time when people are more cautious with their spending."

Nike's selling and administrative expenses fell 2 per cent to US$3.3 billion in the second quarter ended Nov 30, as the pandemic kept it from spending as much on marketing its brands and sports events.

Revenue rose about 9 per cent to US$11.24 billion, while analysts on average had expected US$10.56 billion, according to IBES data from Refinitiv.

The company reported a 12 per cent increase in profit to US$1.25 billion, or 78 cents per share, beating analysts' expectations of 62 cents per share.

REUTERS