Nike Inc. NKE released its results for the first quarter of fiscal 2021 on Sept. 22 after the market closed. The company's earnings and revenue topped expectations courtesy of growth in the digital business.
Key metrics
The company, which is known for its athletic shoes and apparel, posted earnings per share of 95 cents in the first quarter, up from 86 cents per share reported in the prior-year quarter. Revenue of $10.59 billion declined 0.6% on a year-over-year basis. Analysts had predicted EPS of 47 cents on $9.15 billion in revenue.
During the quarter, Nike's gross margin dropped to 44.8%. Various factors were responsible for lower gross margin, including Covid-19 and higher supply chain costs, which was only partly offset by higher average selling prices.
At the end of the quarter, the company had cash and cash equivalents and short-term investments totalling $9.5 billion.
Robust online sales
Online sales were up 82% in the reported quarter as the coronavirus pandemic and the resulting store closures rapidly increased the pace of digital adoption. E-commerce sales made up 30% of the total quarterly revenue. Although the majority of the stores are back open, customer traffic hasn't returned to the pre-Covid or year-ago levels. The company's direct-to-consumer business also surged 12%.
"NIKE is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand," Executive Vice President and CFO Matt Friend said. "We continue to drive investment in capabilities that will fuel our consumer-led digital transformation, catalyzing long-term growth and profitability for NIKE."
To further strengthen its online performance, the footwear and apparel giant said it has been opening smaller-format stores on a global basis where the customers could pick up their online orders. In addition, the company has been investing in its website, mobile apps as well as owned outlets given that consumers are avoiding visiting department stores and shopping malls.
By geography
Sales were down 2% to $4.23 billion in North America, while sales in China were up 6%. Sales in the Europe, Middle East and Africa (EMEA) region rose slightly during the quarter, while the Asia Pacific/Latin America (APLA) region witnessed sales declines of 18%.
In China, 100% of the stores are operational as the region has recovered after the initial outbreak. Nearly all the Nike-owned stores are back open in North America and EMEA too, while roughly 90% are open in APLA.
Guidance
For full-year fiscal 2021, Nike predicts revenue growth to be in the high single digits to low double digits range.
Disclosure: I do not hold any positions in the stocks mentioned.
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