* Reports second quarter 2021 results on Friday, December 18, after close
* Revenue forecast: $ 10.55 billion
* EPS expectation: $ 0.62
As the world's largest sportswear company, Nike (NYSE :), reports its latest earnings tomorrow, investors will be keen to see a rebound in sales after the unprecedented challenges of the global health crisis.
What helps the maker of Air Jordan and Air Force 1 sneakers is its digital strategy that makes up for much of its lost retail sales. While September total sales fell slightly in September, Nike digital sales increased 82% during the quarter ended August 31.
"These are times when the strong can get stronger," Chief Executive John Donahoe said at the time during a conference call with analysts. During the pandemic, he said the company gained market share in the Nike and Jordan brands and returned to growth in international markets, including China and Europe.
The latest turnaround comes from the spring quarter, when the sneaker giant's sales plummeted 38% amid store closings. While the COVID-19 pandemic continues to rage, analysts believe the health crisis has positioned the company to further expand its lead in sportswear.
Nike 1 Year Review.
This positive momentum has greatly helped Nike's stock, which rose more than 37% this year and soared to a record high this week. They closed at $ 138.34 on Wednesday.
Likewise, Nike increased its quarterly dividend by 12% last month, at a time when other global brands were draining or suspending their payouts to save money.
Digital power
The biggest surprise in this remarkable comeback is that Nike is emerging stronger from the pandemic thanks to its superior e-commerce operations and successful execution. That means the disruptions caused by the store closings and locks have not hurt the brand's appeal and customers are returning quickly.
KeyBanc, while assigning a price target of $ 174 to the stock, said Nike has more leeway on the upside fueled by its digital sales.
said analyst Matthew DeGulis in a research note:
"NKE is nearly unprecedented, but we think the scale of the business and the 2x speed investment will drive more full-fledged sales, and the digital shift will enable long-term revenue and margin growth."
Nike was one of the first companies to get caught up in the slowdown caused by the coronavirus. The company was forced to close its stores in China – its second-largest market after the US – when the COVID-19 pandemic hit that country early this year, jeopardizing sales in the company's largest Asian market.
Tomorrow's figures could also show that a strong economic recovery in China is also helping Nike. Sales in China were up 6% in the first quarter as the country managed to contain the virus and revive its economic activity.
Many analysts believe that Nike & # 39; s cost cutting and digital transformation will continue to revive sales and return full growth potential in fiscal 2021. Morgan Stanley reaffirmed its "overweight" – review on Nike and underscored Nike's commitment to accelerate its direct sales, robust athletic footwear growth and refocus its business.
Bottom Line
Nike is one of those companies whose massive investments in technology are paying off during the pandemic and transforming their business into a leaner and more profitable operation. His earnings report on Friday should prove that point.
