Nike leaps 12% after crushing earnings expectations and accelerating online-sales shift

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Nike leaps 12% after crushing earnings expectations and accelerating online-sales shift
Nike shoes are displayed at a Macy's store on September 22, 2020 in Corte Madera, California.Justin Sullivan/Getty Images
  • Nike jumped as much as 12% on Wednesday after the sportswear giant trounced expectations for fiscal first-quarter earnings and sales.
  • Revenue of $10.59 billion beat the $9.11 billion estimate. Earnings per share reached $0.95, more than twice the $0.46 expectation.
  • Much of the gains were fueled by 82% growth in online sales. The surge accelerated Nike's plans to boost its online retail operations.
  • The company also issued fiscal 2021 guidance of high single-digit to low double-digit revenue growth from the year-ago period. Many retail giants have refrained from projecting performance because of pandemic uncertainties.
  • Watch Nike trade live here.
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Nike soared as much as 12% on Wednesday after beating expectations for fiscal first-quarter earnings and issuing optimistic guidance for the rest of the year.

The sportswear company continued to pivot toward online retail throughout the period. Digital sales rocketed 82% higher, with double-digit gains in North America, China, Latin America, and the Asia Pacific region. The increase offset slowed sales at Nike's stores, though nearly all reopened in the quarter after months-long lockdowns.

Here are the key numbers:

Revenue: $10.59 billion, versus the $9.11 billion estimate from analysts surveyed by Bloomberg

Earnings per share: $0.95, versus the $0.46 estimate

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Inventory: $6.71 billion, versus the $6 billion estimate

Gross margin: 44.8%, versus the 42.9% estimate

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"We're getting stronger in the places that matter most. And even in the midst of disruption, we are on the offense," CEO John Donahoe said in a Tuesday earnings call, according to a transcript provided by Sentieo.

Addressing the company's plan to source more sales from online operations, Donahoe deemed digital retail "the new normal."

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"The consumer today is digitally grounded and simply will not revert back," he added.

Matthew Friend, Nike's chief financial officer, issued new fiscal 2021 guidance on the call: The company expects revenue to land in the high single digits to low double digits compared with fiscal 2020.

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Most firms have refrained from issuing such projections. Friend said that though Nike's supply chain was still healing, "stronger-than-anticipated demand" would lift sales and drive "significantly" greater growth in the second half.

The fiscal first-quarter metrics marked a sharp rebound from Nike's previous earnings report, which detailed an unexpected quarterly loss of $790 million after the pandemic roiled in-store sales and prompted an inventory glut from closed outlets.

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Nike closed at $116.87 per share on Tuesday, up 16% year-to-date.

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