Share Prices & Company Research


28 June 2021

Nike strides ahead with Q4 result

Nike, the globally-renowned sports apparel and trainer brand, has once again surprised analysts by beating targets. The company generated earnings per share of 93 cents, which beats analysts’ expectations by 82.35%, and revenue in the fourth quarter of US$12.34bn, exceeding the US$11.01bn analyst target.

Looking at the company’s bottom line profits for the quarter, Nike earned US$1.5bn, which is strides beyond the previous year’s loss of US$790m. Nike has reported that there are many drivers of these impressive performance indicators. First, the revenue from sales in North America (the company’s largest market) hit record highs by more than doubling from a year earlier to US$5.38bn. The negative results from the previous year were understandably driven by retail stores being closed and, therefore, lower demand for Nike products. These sales are primarily driven by people both wanting comfortable clothes to work from home in, but also getting active when they have the chance.

With stores reopening over the quarter and much of the past year, albeit at a slow pace, it has benefited Nike’s wholesale revenues. Due to retail outlets, large shopping centres and department stores being closed, in-store demand remained subdued. Luckily for Nike, its key partners such as JD Sports, Footlocker, and Sporting Goods have opened their stores, driving more transactions.

China has been a great market for Nike to be operating in, but it has not come without its struggles. China is usually one of the fastest growing markets for Nike, but sales were up just 17% to US$1.93bn. The struggle comes as Chinese consumers have attempted to boycott western companies’ products, such as Nike’s, due to allegations about the use of forced labour in the region.

This comes as no surprise, but Nike’s digital sales experienced tremendous growth of 41% year-on-year and were up 147% compared to the fourth quarter of 2019. The e-commerce division at Nike operates partially on a membership model, allowing consumers to pay a subscription to gain early access to new and exclusive products, alongside other perks. This subscription-based part of the company generated a record US$3bn in revenue during the last quarter of 2021.

Nike acknowledges supply chain issues, resulting in higher distribution costs which are expected to ripple through 2022, which has been an industry-wide problem in a post-pandemic environment. Leading on from this, Nike expects low double-digit sales growth, but still expects to exceed US$50bn in 2022. Nike retains its view that outlook for the following year is bright and is optimistic on its Women’s category and sales affiliated with the Jordan brand.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Nike strides ahead with Q4 result
We offer complimentary investment publications produced by our in-house Investment Research team. Please click here to view our range.
Continuing our Personal Service: View our Latest COVID-19 Update: 17th May 2022
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.