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Nike reported mixed third-quarter earnings results on Thursday as the retailer was slammed by U.S. port congestion, global container shortages and pandemic induced store closures in Europe while its direct-to-consumer business continued to pump up revenue.
Nike saw its revenue rise 2.5% compared to a year ago with a take of $10.36 billion. The athletic outfitter admitted in a statement that its "revenue performance was impacted by disruption related to the Covid-19 pandemic."
Fortunately, before the pandemic changed the world at large, the Beaverton, Oregon-based company had started adding muscle to its direct-to-consumer business. As a result, the shutdown of third-party brick-and-mortar retail did not dent Nike's armor. Nike Direct — which operates both digital outlets and a network of company-owned stores — registered a 20% increase in sales pulling in $4 billion. Its digital operations alone saw revenue soar 59%
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“NIKE's brand momentum is as strong as ever and we are driving focused growth against our largest opportunities,” Nike Chief Financial officer Matt Friend said in a statement. “We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for NIKE over the long term.”
Still, the company is not without its challenges.
North American revenue dropped 10% with Nike suffering the same supply chain challenges — from the port congestion to container shortages — as other multi-national corporations. In addition, retail sales in Europe, the Middle East, and Africa (EMEA) saw a decline with approximately 45% percent of NIKE-owned stores experiencing mandatory COVID-19 closures for the last two months of the quarter. Currently, about 65% of Nike's EMEA stores are currently open or operating on reduced hours.
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Overall, Nike reported net income of $1.4 billion, or 90 cents per share, compared with $847 million, or 53 cents per share, a year ago.
Nike also announced it would resume share repurchases after halting its stock buyback program last March to "maximize liquidity during the COVID-19 pandemic." Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased under the program for approximately $4 billion.
In the third quarter, Nike paid shareholders $434 million in dividends, up 14% compared to the prior year.
Nike shares fell slightly in after-hours trading Thursday following the earnings announcement.
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