Nike Inc. (NKE, Financial) released the results for its fourth quarter of fiscal 2021 on June 25 after the market closed.
The company's earnings topped expectations due to growth in the digital business. Additionally, lower marketing expenses during sporting events boosted earnings. Revenue surpassed expectations thanks to strong sales in the U.S. and China.
The company's shares jumped 4.7% in after-hours trading to $139.86 per share following the earnings announcement.
Key metrics
The company, which is known for its athletic shoes and apparel, posted earnings per share of 93 cents in the fourth quarter, up from a net loss of 51 cents reported in the prior-year quarter. Revenue of $12.34 billion jumped 96% on a year-over-year basis. Analysts had predicted EPS of 51 cents on $11.01 billion in revenue.
During the quarter, Nike's gross margin surged to 44.8% courtesy of higher full-price product margins because of geography mix and favorable Nike digital mix. This was partially offset by lower gross margin, including Covid-19 and higher supply chain costs.
At the end of the quarter, the company had cash and cash equivalents and short-term investments totalling $13.5 billion.
Robust online sales
Online sales were up 41% in the reported quarter as the Coronavirus pandemic increased the pace of digital adoption. More customers shopped from the company's website and bought sneakers and workout apparel.
The company is attempting to bolster its online sales so that they contribute 50% of the top line. In the aim to reduce its dependence on third-party sellers, the sportswear giant said it is investing in its own SNKRS app, which targets younger customers.
The company's direct-to-consumer business surged 73% to $4.5 billion. Although the majority of the stores are back open, customer traffic hasn't returned to the pre-Covid or year-ago levels. Therefore, the effort to improve its digital sales is necessary and inevitable.
Executive Vice President and Chief Financial Officer Matt Friend commented the following:

“NIKE’s brand momentum is a testament to our authentic consumer connections, digital strength and continued operational execution. As we advance our consumer-led digital transformation, we are building a new financial model that will continue to fuel long-term sustainable, profitable growth 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 due to the Covid-19 pandemic.
By geography
Sales skyrocketed 141% to $5.4 billion in North America on account of extensive port congestion in the U.S, while sales in China were up 17% to $1.9 billion. Likewise, sales in the Europe, Middle East and Africa region were up 124% during the quarter to $3 billion (barring currency translations), while the Asia Pacific and Latin America (APLA) region witnessed sales growth of 76% to $1.46 billion.
Guidance
For fiscal year 2022, Nike is projecting revenue to grow by a low double-digit percentage on a year-over-year basis to more than $50 billion. Analysts, however, are anticipating the figure to be $48.5 billion.
