Nike shares up 7.8% on good earnings and a cut in inventories
Fiscal first quarter earnings beat Wall Street estimates, sending shares in Nike up almost 8% all-session on the IG platform.
It reported a profit of 94 cents per share, easily beating estimates of 75 cents per share, on revenues of $12.94 billion, marginally missing analysts' estimates of $12.98Bln. It didn't give a precise forecast for the second quarter, instead telling the markets that second quarter revenue would be slightly higher. But what was taken as good news was that Nike's inventories fell 10% during the quarter, indicating the company was successful in reducing excess product ahead of the holiday season.
Nike Q1 earnings
Nike, the popular sportswear company, recently announced their strong earnings for the first quarter of the fiscal year. This news exceeded expectations and caused the company's shares to increase by nearly 8% after the regular trading hours. The company's profit per share was 94 cents, surpassing the predicted 75 cents. While NIKE did not give a specific forecast for the second quarter, their total revenues of approximately $12.9 billion were in line with market expectations. However, they did mention that there might be a slight increase in revenue for the second quarter. Analysts had predicted a 2.1% rise to $13.59 billion in revenue.
The COVID-19 pandemic impact on Nike's sales
One positive aspect of Nike's performance is that they successfully reduced their inventory by 10% during the quarter. This indicates that Nike managed their surplus products well before the holiday season, which eased investors' worries about potential discounts. Consequently, NIKE's share price saw a significant increase of 7.8%, reaching $96.63. Looking at the long-term chart, we can see the impact of the COVID-19 pandemic on Nike's sales. During the lockdown period, people purchased sportswear for home workouts, leading to a rise in Nike's sales. However, as the pandemic situation improved, people's buying habits changed, and sportswear, especially sneakers or trainers, became less trendy. In response, Nike shifted its focus towards heavier footwear designed for walking and hiking.
It remains uncertain how Nike will perform in this new market trend. Currently, the company's shares have opened positively on the trading platform, with a gain of 7.8% in yesterday's trade. The market will continue to monitor Nike's performance as they adapt to evolving consumer preferences and uphold their financial outlook.
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