Nike shares rise as earnings, sales top estimates, fueled by strong North American demand

  • Nike's fiscal second-quarter earnings and sales topped Wall Street's expectations as consumer demand in North America, the retailer's biggest market, was robust.
  • CEO John Donahoe said the retailer is in a "much stronger competitive position" than it was pre-pandemic.

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Nike shares climbed more than 4% in extended trading Monday after the sneaker maker reported fiscal second-quarter earnings and sales that topped analysts' expectations, despite ongoing supply chain pressures.

Chief Executive Officer and President John Donahoe said the retailer is in a "much stronger competitive position" than it was pre-pandemic.

While Covid-related factory closures overseas dented some of its progress earlier in the year, Nike said shipments of inventories picked up in this latest quarter, particularly in North America.

Here's how Nike did in the three-month period ended Nov. 30 compared with what analysts were anticipating, using Refinitiv estimates:

  • Earnings per share: 83 cents vs. 63 cents expected
  • Revenue: $11.36 billion vs. $11.25 billion expected

Nike said net income rose to $1.34 billion, or 83 cents a share, from $1.25 billion, or 78 cents per share, a year earlier. That topped analysts' expectations for earnings of 63 cents a share.

Revenue rose 1% to $11.36 billion from $11.24 billion, outpacing estimates of $11.25 billion.

Sales in North America, Nike's biggest market, climbed 12%, representing the highest growth of all geographies.

Sales in Greater China fell 20%, while revenue in its Europe, Middle East and Africa region grew 6%. Nike's recovery in China has become a bigger focus for investors of late as the market remains key to the company's future growth. Western brands have faced some backlash in China amid global tensions.

"Gauging this trajectory of that very important region is going to be a question that we're going to have to get into focus on," said BMO Capital Markets analyst Simeon Siegel about China.

Nike said its digital sales rose 12% year over year, while sales through Nike Direct were up 9%. The company has increasingly pulled its goods out of wholesale channels, such as discount stores, and instead is selling more workout gear through its own website and stores.

And just earlier this month, Nike announced it bought virtual sneaker company RTFKT for an undisclosed amount, making a bet on the metaverse." It had been filing trademarks indicating its intent to make and sell virtual Nike-branded shoes and apparel.

The company didn't offer an update for its full-year outlook in its earnings release. Earlier this year, Nike slashed its revenue forecast for fiscal 2022 to account for longer transit times, labor shortages and prolonged production shutdowns in Vietnam, where Nike makes about half of its shoes.

Analysts have been looking for Nike to report annual earnings of $3.59 per share on sales of $47.1 billion, according to Refinitiv data.

Nike shares are up about 11% year to date, bringing its market cap to $248.5 billion.

Find the full earnings press release from Nike here.

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