Nike beats profit estimates as online sales rise 82%

Nike Inc's online sales of Air Maxes and other shoes in North America drove quarterly profit and revenue ahead of Wall Street estimates and led the world's largest athletic shoemaker to forecast better-than-expected sales for the year.

Shares rose 13 per cent and are set to open on Wednesday at an all-time high of about $132.

Nike's brick-and-mortar sales have fallen since the Covid-19 pandemic began, as malls and department stores were shuttered around the world. To combat that, the footwear maker has turned its focus to direct-to-consumer sales, especially through its own website and apps.

The brand's digital sales surged 82 per cent in the first quarter ended August 31, with at least double-digit rises recorded in all regions. In the prior quarter, Nike reported a 75 per cent increase in online sales — nearly a third of total revenue, a goal Nike had previously set for 2023.

"We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back," Nike Chief Executive John Donahoe said.

Nike said it expected fiscal full-year revenue to rise between high single digits and low double digits versus last year, saying second-half sales would be "up significantly," even though first-half growth would be flat. Analysts forecast a fiscal 2021 sales rise of 5.9 per cent, according to Refinitiv IBES.

US retailers including Foot Locker Inc and Dick's Sporting Goods Inc — which canceled shipments in the early days of the pandemic — have begun making orders for inventory in the second half of Nike's fiscal year, analysts say.

Earnings before interest and taxes rose 18 per cent in North America, Nike's biggest market, with footwear sales up 11 per cent to nearly $3 billion.

"Great quarter, guidance was better than expected, the stock is priced to perfection," said Nate Fischer, chief investment strategist at Strategic Wealth Partners, which does not own Nike shares but has the stock on its watchlist. He warned, however, that the stock would be sold off if it misses any quarters coming up.

Tuesday's results are a far cry from those of just a quarter ago, when Nike reported a surprise loss of $790 million as retailers canceled orders and people kept away from Nike stores in key markets like North America, Europe and China.

Shares in the Portland, Oregon-based company have risen 16 per cent this year. Nike has gained favour among shoppers this year with investments in marketing itself as a socially conscious company, prominently supporting movements like Black Lives Matter and Time to Vote.

First-quarter sales in China, where the economy opened from lockdowns much earlier than in other parts of the world, rose six per cent, led by factory stores and online sales.

The company's net income rose to $1.52 billion, or 95 cents per share, from $1.37 billion, or 86 cents per share, a year earlier.