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Nike is obviously very sensitive to emerging news and, with the high valuation of 39x the shares are likely to have some interest rate exposure as well. The company has created a host of internationally-known products and marketing campaigns for many years. And that’s what we’ll continue to do regardless of what the future deals us. I was in the middle of my workout in one of our gyms here on campus. So, I’m pumped up about that, as our — as we said earlier, in all seriousness, millions and millions of SNKRS users.
This was because NIKE Direct, which concentrates on internet sales, is rapidly becoming an important part of Nike’s business strategy. In terms of figures, NIKE Direct’s fourth-quarter sales increased 73% year-over-year to $4.5 billion, which was very impressive. Revenues of $12.3 billion were higher than Wall Street’s expectations of $11.1 billion. That’s up nearly 96% from the year-ago quarter’s revenue, indicating a turnaround in the company’s operations. Nike had a record-breaking fiscal fourth quarter, with revenues nearly doubling over the prior year quarter. Nevertheless, solid Q1 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.
NIKE Direct grew more than 45%, with NIKE Digital now representing 26% share of business. Digital continued its momentum and grew more than 40%, increasing market share by outperforming industry trends with strong growth in traffic and repeat buying member activity. The return to physical retail accelerated NIKE-owned store growth of over 50% as we serve members with elevated experiences. This was driven by highly elevated in-transit inventory levels as transit times in North America deteriorated during the last quarter, now almost twice as long as pre-pandemic levels. This impacted product availability across the marketplace and our ability to serve strong levels of consumer demand, particularly in the wholesale channels.
3 Dividend Strength
Analysts expect healthy growth in Nike’s DTC sales, though likely slower than the same quarter a year ago. Nike Inc. , the world’s leading athletic apparel company, is showing strong signs of recovery after the initial shock from the COVID-19 pandemic. Temporary store closures and lower foot traffic decimated sales in the fiscal fourth quarter of the company’s 2020 fiscal year , ending in May.
- In this summer in Tokyo, our leadership as the world’s most innovative sports brand was demonstrated once again.
- In short, despite global supply chain challenges, Poser believes Nike is well-positioned to report strong numbers in the upcoming quarter.
- Following their prepared remarks, we will take your questions.
- According to ZACKS Research, for fiscal 2022, the company expects to grow revenues in the low-double digits, surpassing $50 billion because of strong customer demand across its segments.
- Now, on a positive note, a few factories have just had their reopening plans approved, like this week.
Given that these returns are generally negative, long-term shareholders are likely bearish going into this earnings release. As a fundamental stock market analyst, I mostly use real-market data to estimate stocks’ intrinsic value. I evaluate dividend stocks using Comparative Company Analysis and Dividend Discount Model methods. I also use statistical analysis to make projections on variables related to the market to turn my observations into numbers. 1) From a price-to-earnings perspective, NKE’s forward PE ratio is 37.8x, which is higher than its peers.
Marketrank
NIKE Brand Digital sales increased 29 percent, or 25 percent on a currency-neutral basis. Nike said that 90 percent of its stores were closed for approximately eight weeks across North America, Europe, the Middle East, Africa, Asia Pacific, and Latin America. Investors will be watching to see if Nike has been able to maintain its comeback momentum amid a resurgence of global coronavirus cases when the company reports earnings on December 18, 2020 for Q2 FY 2021. Tesla’s next earnings report is expected to be released on July 25, 2022.
In EMEA, Q1 revenue grew 8% on a currency neutral basis and EBIT grew 26% on a reported basis. This region was energized by the EURO this summer, where NIKE players scored more goals than all other brands combined and more than half of those goals were with our Mercurial boots. We saw a strong consumer response to both the Mercurial boot and replica jerseys during the tournament. NIKE Direct grew 10% on a currency neutral basis, led by our NIKE owned stores. MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Nike direct sales were $4.7 billion, up 28% on a reported basis and up 25% on a currency-neutral basis, largely bolstered by a 24% growth in owned physical retail that exceeded pre-pandemic levels of Q1 of fiscal 2020.
And to take it a step further, over the last three years, we’ve actually exited about 50% of our undifferentiated accounts, while we’ve been able to deliver strong double-digit growth. With the updated outlook on the https://xcritical.com/ revenue, with the disruption of the supply chain. Can you just help us understand how you’re thinking about spending against the lower levels of revenue, whether it’s demand creation or the investment technologies?
The new experience debuted in one of the year’s most highly anticipated launches the Off-White Dunk. For the launch last month, we rolled out our new elevated SNKRS exclusive access. This approach sends personalized purchase offers to members based on their engagement with SNKRS past purchase attempts and other criteria using data science to drive digital member targeting. For example, 90% of the invitees for the Off-White Dunk went to members who have lost out on a prior Off-White collaboration over the past two years. The result the Off-White Dunk end up in the hands of hundreds of thousands of our most deserving members creating what we call exclusivity at scale. And this improved consumer experience has a positive impact on the entire business.
Sales & Book Value
NIKE Digital grew more than 60% on a currency neutral basis, highlighted by the expansion of our NIKE app. In June, the app went live in Mexico and six additional countries across Southeast Asia generating 3 million local downloads during the quarter. We’re also leveraging our digital advantage by investing in our brick-and-mortar fleet to create a compelling retail footprint that super charges how we serve consumers across physical and digital. A couple of weeks ago, I was in Los Angeles and toward some of our great retail there. I got to see a wide variety of stores including our NIKE Live door in Long Beach, a community door in East LA and more.
“We’ve already lost 10 weeks of production, and that gap will continue. … It’s going to take several months to ramp back to full production,” he told analysts. Nike’s revised forecast comes in the wake of a mixed first-quarter earnings report. But the company sold more goods to shoppers at full price, boosting profits.
Tech Stocks head Fake Is A Red Flag, But Divergent Stocks Will Still Soar
Retail sales for our performance business grew strong double digits during the fall season, led by running, fitness and basketball, powered by excitement from the Olympics, the new WNBA season and the NBA finals. Now, one of the best gauges for success in our digital business is how strongly we’re connecting with members. Our membership strategy is working as we increasingly use data and analytics to personalize member product offering and experiences.
Nike’s revised forecast comes in the wake of a mixed first-quarter earnings report. It missed revenue expectations, as demand in North America softened. But the company sold more goods to shoppers at full price, boosting gains. “Investors are focused on the Vietnam factory closures impact on FY revenue guidance. But high valuation requires beat & raise quarters – stock price pullback possible & we’re buyers on any weakness. Reiterate Overweight; raise price target to $221,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.
We’re the largest kids’ athletic footwear brand in the world, but we know that there is still so much potential ahead. As has been the case since the start of pandemic, I’m proud of the way our entire NIKE team has delivered through macro volatility. Over the past 18 months, we’ve demonstrated our ability to manage through turbulence to emerge even stronger and better positioned. And that’s what we’ll continue to do as we navigate through these current supply chain issues. We’ll focus on what we can control, while leveraging the many levers.
Digital sales grew 40%, driven by market share growth on strong site traffic and repeated buying from members. Sales at NIKE-owned stores accelerated more than 50% due to the return of traffic to physical stores and enhanced experiences. Looking ahead, NKE increasingly focuses on the value of its design properties rather than on the utilitarian shoe business. The Wall Street analyst consensus rating is bullish and the consensus 12-month price target is 25% above the current share price.
NIKE’s stock is owned by a variety of retail and institutional investors. Top institutional shareholders include Sumitomo Mitsui Trust Holdings Inc. (0.30%), Nordea Investment Management AB (0.21%), Banque Pictet & Cie SA (0.19%), Robeco Institutional Asset Management B.V. (0.18%), AKO Capital LLP (0.17%) and California Public Employees Retirement System (0.16%). nike q1 earnings 2022 According to analysts’ consensus price target of $172.12, NIKE has a forecasted upside of 36.5% from its current price of $126.06. Nike’s total return price represents that the stock is performing profitable, and compared to other peers, like Adidas, it is in a good position. Thus, I believe that Nike has all chances to rise and get to $165 per share .
I am bullish on the stock due to my estimations on its 3Q 2022 revenue and the stock’s fair value. The company’s demand creation expenses increased from $729 million in 2Q 2021 to $1017 million in 2Q 2022, up 40%, implying it is getting bigger. Despite the supply chain challenges in the recent quarters and its inventory constraints, Nike’s digital sales increased 12% in the second quarter of FY 2022 compared with the same period last year. The NIKE Direct business improved 10% on a currency-neutral basis, driven by growth at NIKE stores. Traffic at EMEA stores increased year over year in double-digits coupled with better-than-anticipated conversions.
Related Terms
In this summer in Tokyo, our leadership as the world’s most innovative sports brand was demonstrated once again. If NIKE were a country, we would have eclipsed the competition, capturing 226 medals, including 85 golds. NIKE creates value through our relentless drive to serve the future of sport and as we saw again in Q1, our strategy is working with business results that reflect our deep connection to consumers around the world. Operating overhead expense increased 8 percent to $2.7 billion, primarily due to higher strategic technology investments and wage-related expenses. NIKE Brand Digital sales increased 12 percent, or 11 percent on a currency-neutral basis, led by 40 percent growth in North America.
Consumer demand for NIKE, Jordan and Converse, remains incredibly high, and our first quarter financial results would have been even stronger, if not for supply chain congestion, resulting in lack of available supply. And so, we’ll continue expanding these compelling experiences across our fleet in fiscal ‘22, driving that interplay between physical and digital retail. In the end, NIKE is doing what we always do, staying on the offense. The strength of our consumer demand around the world continues to give us confidence in our playbook and execution. I said it earlier and I’ll say it again, I am proud of our resilient and creative team across NIKE, Jordan and Converse, and the work we continue to deliver for consumers. We’ve already gotten stronger through this pandemic, and we’re going to emerge from it even stronger yet.
Historical Earnings Performance
Sneakers has increasingly become an indicator and barometer of brand heat, now being operational at scale in 50 countries around the world. NIKE Digital is now 21% of total NIKE brand revenue, which is an increase of 2 points versus last year, with strong double-digit growth versus the prior year even with broad reopening of physical retail. Digital is increasingly becoming a part of everyone’s shopping journey and we are well positioned to reach our vision of a 40% owned digital business by fiscal ’25. First Quarter revenues increased 12 percent, on a currency-neutral basis, with growth across all channels, led by NIKE Direct growth of 25 percent.
Vote “Outperform” if you believe NKE will outperform the S&P 500 over the long term. Vote “Underperform” if you believe NKE will underperform the S&P 500 over the long term. The company’s average rating score is 2.83, and is based on 25 buy ratings, 3 hold ratings, and 1 sell rating.
The effective tax rate was 11.5 percent compared to 12.4 percent for the same period last year, primarily due to benefits from stock-based compensation offset by a reserve for a discrete tax matter. Moreover, as Figure 8 indicates, Seeking Alpha Quant Rating indicates that during the last 90 days, most Wall Street analysts were Buy on this stock. Also, Figure 9 shows the price target range is from $132 to $203. Besides NKE’s surging total equity by 85% to $14,924 million since 2020, the company’s net debt has dropped to -$2,380 million. Also, NKE successfully improved its liquidity by achieving negative net debt in the last couple of years.
Nike said that its production and delivery times have been impacted for the Christmas period and the following few months due to factory closures. The company expects its Q2 revenue growth to be flat to down by low-single digits and its full-year sales to increase at a mid-single-digit pace. Nike brand revenue rose by 12% to $11.6bn on a currency-neutral basis, driven by Nike Direct’s double-digit growth in the North America, Asia-Pacific and Latin America and Europe, Middle East and Asia regions. Nike shares are up about 13% year to date, as of Thursday’s market close, but down about 9% from an all-time high reached in early August.
Time To Upgrade!
Getty Images Nike announced first quarter earnings for fiscal year 2022 month ending August 31, 2021, with revenues up 16% compared to last year. Nike direct sales were up 28% and gross margin improved to 46.5% as compared to 44.8% in Q1 last year. John Donahoe, CEO of Nike, discussed the growth in Q1 despite current supply chain issues and inventories being flat to last year. We have gotten stronger from the pandemic and will be even stronger as we emerge from it.” Nike anticipates that prices will rise in the second half of the year to offset costs related to on-going supply chain issues. And when we finished the first quarter, we finished our first quarter spending at about 29% of revenue.