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Nike smashes revenue, profit estimates on North America online boom

Richa Naidu and Nivedita Balu
·2-min read
FILE PHOTO: FILE PHOTO: Nike shoes are seen on display in New York
FILE PHOTO: FILE PHOTO: Nike shoes are seen on display in New York

By Richa Naidu and Nivedita Balu

(Reuters) - Nike Inc <NKE.N> easily beat analysts' estimates for quarterly revenue and profit on Tuesday, powered by online sales for its Air Maxes and other shoes in North America, sending its shares up about 9%.

Nike's brick-and-mortar sales have fallen off since the COVID-19 pandemic began, as malls and department stores around the world shuttered. To combat this, the footwear maker has turned its focus on direct-to-consumer sales, especially through its own website and apps.

The brand's digital sales surged 82% in the first quarter ended Aug. 31, with at least double-digit rises recorded in all regions. In the prior quarter, Nike reported a 75% increase in online sales, which are now nearly a third of total revenue – a goal Nike had previously set a for 2023.

Shares in the Portland, Oregon-based company have risen 16% this year and are set to open on Wednesday at an all-time high of about $127. Nike has gained favor among shoppers this year with investments in marketing itself as a socially conscious company, prominently supporting movements like Black Lives Matter and Time to Vote.

Earnings before interest and taxes rose 18% in North America, Nike's biggest market, with footwear sales up 11% to nearly $3 billion.

Tuesday's results are a far-cry from those of just a quarter ago, when Nike reported a surprise loss of $790 million as retailers canceled orders and people kept away from Nike stores in key markets like North America, Europe and China. Margins

First-quarter sales in China, where the economy opened from lockdowns much earlier than in other parts of the world, rose 6% led by factory stores and online sales.

Despite the pandemic and slow footfall, Nike said it kept nearly all its store doors open - more than in the last quarter - across North America, Europe, Africa, China and the Middle East.

However, some analysts say U.S. retailers including Foot Locker and Dick's Sporting Goods - which canceled shipments in the early days of the pandemic - have begun making orders for inventory in the second half of Nike's fiscal year.

The company's net income rose to $1.52 billion, or 95 cents per share, from $1.37 billion, or 86 cents per share, a year earlier.

Revenue fell 0.6% to $10.6 billion.

Analysts had forecast a profit of 47 cents per share and revenue of $9.15 billion, according to Refinitv IBES.

(Reporting by Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila and Tom Brown)