Nike Shares Rise as Wall Street Reacts to Q2 Earnings Results

Shares of athletic and shoe apparel company Nike were on the rise on Monday after the company reported second quarter earnings and revealed that sales had topped estimates.

As consumer demand in North America accelerated, both sales and earnings were ahead of what Wall Street had anticipated.

The company’s CEO John Donahoe said the retailer is in a “much stronger competitive position” than it was pre-pandemic. For its full-year outlook, Nike is calling for mid-single-digit revenue growth.

Shares jumped about 3% in after-hours trading on Monday.

Chief Financial Officer Matt Friend told analysts that all factories in Vietnam are up and running, and production is back to about 80% of pre-closure levels.

Friend added that the company is increasingly confident that supply levels globally will normalize heading into fiscal 2023.

For the three-month period ended Nov. 30 compared Nike reported earnings per share of 83 cents. Analysts had expected 63 cents per Refinitiv estimates. Revenue at $11.36 billion was also higher than the $11.25 billion.

For the quarter net income rose to $1.34 billion, from $1.25 billion, or 78 cents per share, a year earlier. Revenue rose 1% to $11.36 billion from $11.24 billion.

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

In Greater China, the company’s sales has fallen 20% while in Europe, Africa, and the Middle East, sales had grown 6%.

According to Nike, fewer items were sold in China during the latest quarter due, in part, to lost production from the Vietnam factory closures and lower available inventory. The company’s executives add that ongoing Covid-related lockdowns in the country also made traffic patterns more volatile.

Fiscal 2022 will be a year of recovery for China, Friend said.

Earlier this month Nike acquired virtual sneaker company RTFKT for an undisclosed amount.

“We’ll invest … to deliver next-generation experiences that involved RTFKT and Nike brands,” said Donahoe on an earnings call.

Looking ahead, Nike projects that Q3 sales will grow a low-single-digit rate from the prior year, due to lingering effects from the Vietnam factory closures. Analysts had been forecasting a 2.5% lift.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.