- Nike posts £8.51 billion in revenue in the third quarter versus £8.26 billion expected.
- Nike posts £713.72 million in net income in the third quarter versus £930 million last year.
- Nike posts a 13% increase in direct-to-consumer business and 36% increase in digital sales.
Nike (NYSE:NKE) announced its quarterly financial results on Tuesday that beat analysts’ expectations for sales in the third quarter. Nike attributed its success to upbeat performance in the North American market and increased online sales that contributed to offsetting the weaker performance in China amidst the Coronavirus crisis.
In premarket trading, Nike gained 9% in the stock market on Wednesday. At £67.40 per share, the sports apparel maker is still trading around 20% down year-to-date. Its performance in 2019, on the contrary, was reported largely upbeat with an annual gain of around 40%. Nike currently has a market cap of £75.72 billion with a price to earnings ratio of 26.76.
CEO John Donahoe Says Nike Is Recovering Quickly In China
According to CEO John Donahoe, Nike is starting to recover in China. In Q3, the COVID-19 outbreak resulted in a 5% decline in its sales in Greater China that marked the 1st for Nike after posting a double-digit-growth for 22 quarters in a row.
Nike highlighted in its earnings report on Tuesday that in February, Nike had closed around 75% of its stores in mainland China while the rest of them resorted to reducing the working hours. The company, however, has now resumed operations at 80% of its stores in mainland China. Digital sales, as per Nike, increased by 30% in mainland China in the third quarter.
Nike refrained from giving financial guidance for the fourth quarter amidst the Coronavirus driven uncertainty. It, however, expressed confidence that mainland China will climb into the growth zone before the end of the year.
Nike’s Earnings In The Third Quarter Included A 21-Pence Charge
Despite an increase in Nike’s revenue to £8.51 billion in Q3 versus £8.09 billion last year, Q3 earnings fell shy ascribed to business disruptions amidst the health emergency. At £713.72 million (£0.44 per share), Nike’s net income was significantly lower than £930 million (£0.57 per share) in the same quarter last year.
In the recent quarter, Nike’s earnings encompassed a 21-pence charge attributed to transitioning its Argentina, Uruguay, Brazil, and Chile businesses to a new distributor model. Nike’s earnings in Q3 adjusted for the aforementioned charge topped the experts’ forecast of £0.50 per share. On the revenue front, analysts were expecting the company to print £8.26 billion in the recent quarter.
Other prominent figures included in Nike’s performance results on Tuesday included a 13% growth in its direct-to-consumer business and a massive 36% increase in digital sales.