Nike Continuing to Defy Analysts and Exceed Expectations

Image: Pixabay

Leading U.S. sports brand Nike has revealed better-than-expected financial results for the last quarter, with particularly impressive sales in China despite the ongoing U.S.-China trade war. The figures of the previous quarter, which Nike prefers to label as its first quarter of the 2020 fiscal year, saw earnings per share reach as high as $0.86, compared with the $0.70 previously forecast by analysts.

Sales during the last quarter reached $10.66 billion worldwide, amounting to a 7.2% year-on-year increase and $220 million more than was previously anticipated. This was due in part to an 11% increase in overall shoe sales, as well as an 11% rise in sports equipment sales.

Earlier this year, Nike joined forces with hundreds of other leading footwear firms worldwide to call on President Trump to bring an end to rising import tariffs for goods sent to China. Nike wasn’t only reaching out to the President to protect itself, but the wider industry too. Fortunately for Nike it seems that it can handle the rising tariffs and simultaneously improve its presence in the People’s Republic. It experienced a 27% rise in turnover in China alone, compared with an increase of just 4% in North America. This prompted the Nike share price to reach all-time highs of $96.10.

The U.S.-China trade war has had serious implications on the American economy as well as the dollar itself. In recent weeks, the price of the dollar has plummeted against the euro, causing currency trading experts to believe that a potential Brexit deal could strengthen the European economy at a time when America is getting unnecessarily tough with the Far East.

Image: Pixabay

Nike has managed to buck the trend of the trade war by driving growth through new digital partnerships. E-commerce sales soared by as much as 42%, according to CEO Mark Parker. In recent months, Nike has partnered with some of the biggest digital platforms in China such as WeChat and Tmall to build a future-proof active customer base that can convert as quickly and seamlessly as possible.

Aside from its impressive sales figures in the Far East, Nike also recorded double-digit growth among female shoppers. Furthermore, it also experienced its best ever “back to school” season, with sales of kids’ shoes reaching unprecedented levels. All of these surprising figures helped to supplement the brand’s growth in profit. Mr Parker confirmed that an improved overall gross margin, combined with the rising turnover, was key to generating the improved profit for shareholders. The brand was able to sell more of its products at full retail price, due largely to selling more via its own premises as opposed to via wholesalers and outlets.

All of this suggests that Nike’s results for the last quarter are an indicator of the brand’s true power. The challenging macroeconomic conditions, such as any economic stagnation regarding Brexit or the ongoing U.S.-China trade war, are seemingly masking Nike’s strength in the marketplace. One thing is for sure, Nike is now considerably more versatile as a retail brand than when it first came onto the scene for its trainers.