Nike picks up pace in fourth quarter – the king is back
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Nike picks up pace in fourth quarter – the king is back

Global athleisure brand and market-leading sneaker maker Nike has bounced back into fashion after a strong fourth quarter that saw it reverse trajectory after a difficult 12 months. The company delivered beats on revenue, saw incredible international growth, and raised its outlook for the coming fiscal year. Investors, understandably, reacted positively, and the company’s share price surged as a result.

Nike’s share price jumped on the back strong earnings last week

graph 0307 nike

SOURCE: Yahoo Finance

Nike said that sales rose by 3% year on year in North America – the first sales rise in 12 months. This is a crucial fact, because North America remains the company’s most important region (it accounts for about 40% of total revenues). Those revenues (worldwide) also rose by 13%, against the same period in the previous year, to $9.8 billion – a beat against Wall Street’s expectations. Despite the importance of the North American market, it was Nike’s international operations that fuelled growth. The outperformer in terms of region was Greater China, which saw a 25% rise in revenues from the previous year. As a result, the company said that sales growth this year would be “better than previously expected.”

The reversal in fortunes is quite rightly being heralded as a return to form. Nike CEO Mark Parker said: “we have momentum.” Barclays analyst Matthew McClinton spoke for many investors when he said: “the Nike story is officially back at this point.”

Summing up what Nike is getting right, Parker told listeners on an earnings call:

“First, we’re winning with new innovation. We’re leading with platforms, not just products. For example React and Air Max are scaling through multiple styles and across categories. They’re driving extraordinary growth and brand heat with consumers. Second, our Digital Offense is transforming NIKE from how we connect with consumers to how we deliver products. This is a major shift from operating models of the past to a new digitally powered model of the future. And third, with a more focused strategy, we’re running a more complete portfolio with better balanced growth across geographies and categories.”

Disclosure

Dominion holds Nike in its Global Trends Luxury Fund.


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