Shoppers, some wearing PPE (personal protective equipment), with a face mask or cover as a precaution against COVID-19, line up to enter a recently reopened Nike store at Gunwharf Keys Mall in Portsmouth, south of England, June 16th. 2020.
Adrian Dennis | AFP | Getty Images
Shares of Nike jumped more than 5% to intraday highs on Monday, despite broader sell-offs as investors rallied behind the sneaker maker’s latest quarterly results and an optimistic outlook that not many Retail companies have been able to offer during the Covid health crisis.
The retailer’s big bets on its digital business clearly bear fruit, with online sales of its namesake brand rising by more than 80% over the last period. It makes Nike especially well-positioned this holiday season, as a record number of consumers buy gifts online. Nike has also cut its inventories, making it less dependent on discount. Management expects e-commerce to account for about half of Nike’s sales in the near future.
“We anticipate the shift to digital as a multi-year sales and earnings engine, supporting the stock’s premium valuation multiple,” Joseph Feldman, an analyst at Telsey Advisory Group, said in a customer note.
TAG raised its price target for Nike to $ 175 ($ 155).
Nike’s plans to eliminate more of its wholesale partners and sell more directly to customers are also seen as a positive aspect, as outlets such as department stores are finding it increasingly difficult to attract buyers. And some of Nike’s peers, such as Under Armor and Adidas, are considered more dependent on wholesalers.
Nike “turned on the lights on Friday night,” as Simeon Siegel of BMO Capital Markets said, referring to the retailer’s Friday afternoon earnings report, before the holiday week.
“Nike’s revenue performance was much better than its peers,” Siegel said in a note to customers, adding that he expects Nike to “capitalize on stock-taking opportunities amid the pandemic dislocations.”
Siegel raised its stock price target from $ 160 to $ 160.
Shares of Nike closed at $ 137.28 on Friday, after rising more than 35 percent this year, raising its market capitalization to $ 315.5 billion. Shares hit an all-time intraday Monday morning high of $ 147.95.
For prosecutor 2021, Nike is now asking for revenue to increase by a low percentage of teens year after year, compared to previous high, single, or low-digit prospects. According to Refinitiv, analysts were calling for 12.3% growth.
Nike’s profit prospects are also improving, as it expects to cut clothing and footwear cuts in the coming quarters and sell less inventory through wholesale channels. Previously, the company expected its margins to be virtually flat during the year.
“We believe that right now we are better positioned to handle the uncertainty probably than we were before the pandemic,” financial director Matt Friend told friends on Friday. “We’ve learned a lot in the last nine months.”
During the three-month period ended Nov. 30, Nike reported a net profit of 78 cents per share, with revenue of $ 11,244 million, surpassing estimates of 68 cents and $ 10.56 million. Digital sales soar to three digits in North America. And it reported double-digit revenue growth in China.
—CNBC Michael Bloom has contributed to this report.