Nike shares soared after the company projected that revenue this fiscal year will surpass $50 billion for the first time, benefiting from rebounding growth in North America.
The company is forecasting low double-digit sales growth in the current year, ending next May, executives said Thursday on a conference call after reporting better-than-expected fiscal fourth-quarter results. Growth will be faster in the first half as consumer interest revives.
Nike is gaining momentum as sports leagues and events resume in the US and Europe reopens for business, driving renewed demand for its sneakers and apparel. Wall Street was forecasting sales of $48.6bn for fiscal 2022.
The athleticwear maker posted sales growth across its regions last quarter, boosted by record revenue in North America. Global sales almost doubled to $12.3bn in the period ended May 31, the company said in a statement. That beat analysts’ expectations.
Shares of the Beaverton, Oregon-based apparel and footwear company jumped as much as 13 per cent to $151 in trading on Friday before US markets opened, an all-time high. The stock was down 5.6 per cent this year through Thursday’s close in New York. Rival Adidas gained as much as 5.8 per cent in Germany.
Several analysts increased their price targets on the stock, noting the company’s impressive multiyear targets.
The growth in sales isn’t just a sign the company has moved past pandemic challenges. Chief executive John Donahoe is also pushing to radically cut down on wholesale distribution by eliminating many of its retail partners in favour of more lucrative direct-to-consumer sales. That’s led to a rise in sales for the Nike Direct division, which spiked 73 per cent in the latest quarter. It has also ushered in improved margins.
“We are building a new financial model that will continue to fuel long-term sustainable, profitable growth,” Matt Friend, Nike’s chief financial officer, said in the statement.
North America had previously been a problematic market for Nike, hindered by supply-chain issues that kept products from reaching consumers. Some of those delayed shipments were bumped into this quarter, aiding wholesale revenue as US states eased virus-related restrictions and many sporting events returned in full.
At the same time, Nike’s sales growth in Greater China, which had until recently led the company’s revival, is starting to cool off. Revenue climbed just 17 per cent and less when excluding currency swings to $1.93bn, missing analysts’ expectations of $2.25bn. The results may reflect the impact of boycotts of Nike and other brands over corporate statements on forced labour related to cotton production in the Xinjiang region.
The company forecasts growth in the low to mid-teens in China over the long term.
Meanwhile, store closures persisted in Europe, the Middle East and Africa throughout the period. But Nike has been able to reopen almost its entire network, with 99 per cent of stores in the region now fully operational or open with reduced hours.