Image source: Paul Weaver @paulweaver - unsplash
What's going on?
This is Nike’s country, we’re just living in it: the sportswear giant reported strong results on the back of resurgent American sales late last week, and its stock initially jumped 13%.
What does this mean?
Nike’s quarterly revenue and profit both came in ahead of forecasts, while its ecommerce sales kept doing their thing: they were up 41% versus the same time last year. But the real winners were its North American business – whose revenue more than doubled from this time last year to hit a record high – and its wholesale arm. That segment sells the company’s products to the likes of Foot Locker and Dick’s Sporting Goods, and it did well out of the fact that those retailers were actually, y’know, open.
Why should I care?
For markets: It’s about quality, not just quantity.
Nike’s Chinese business made up for a lot of lost growth during the pandemic, but political disruptions in the country can cause issues at a drop of a hat. Case in point: the company expressed concern last quarter about allegations of forced labor in Xinjiang, and consumers threatened to boycott the brand. Investors, then, will have been glad to see Nike’s all-important US market roar back to life – especially since it encouraged the company to up its earnings forecast for the rest of the year.
The bigger picture: Nike and FedEx go hand in hand.
Logistics giant FedEx has been benefiting from Nike and its rival retailers’ booming ecommerce sales, and that played a big part in the stronger-than-expected quarterly sales it shared on Friday. The company’s profit would’ve beaten expectations too, but pension-related costs got in the way. That ultimately deterred the company from making an earnings forecast for this year, which might be why – despite everything else going to plan – investors sent its stock down on the announcement.
Originally posted as part of the Finimize daily email.
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