Why Nike Stock has jumped today


What happened

Actions of Nike (NYSE: NKE) jumped 6.2% on Tuesday after the sportswear titan’s second-quarter FY2022 profits exceeded investor expectations.

So what

Nike’s revenue grew 1% year-over-year to $ 11.4 billion, in part thanks to a 12% increase in digital sales.

by Nike gross profit enjoyed a 9% increase in direct sales, which include those produced by its retail stores and e-commerce sites, to $ 4.7 billion. These sales tend to be more profitable than the wholesale operations of the business. Nike’s gross margin, meanwhile, improved 2.8 percentage points to 45.9%.

“Our second quarter results reflect our close relationship with consumers, the continued strength of our brands and strong market demand,” CFO Matt Friend said in a statement.

Nike clothing is popular among athletes and sports fans all over the world. Image source: Getty Images.

Nike stepped up its marketing campaigns, which contributed to a 15% increase in selling and administration costs. However, its gross income and profits, combined with share buybacks and a lower effective tax rate, pushed Nike’s net income up 7% to $ 1.3 billion, or 0.83. $ per share. This was well above Wall Street estimates, which predicted earnings per share of just $ 0.63.

Now what

Impressively, Nike has managed to overcome significant supply chain disruptions. Stockouts caused by factory closures led to a 20% drop in sales for the apparel maker in China. These losses were, however, largely offset by a 12% increase in Nike sales in North America.

Additionally, although Nike has warned investors that manufacturing challenges will continue to weigh on its results for the next several quarters, management has reiterated its forecast of “single-digit” revenue growth over the next few months. fiscal year 2022. The company also expects its gross margin to improve further. in the coming year.

“Nike’s strong results this quarter prove once again that our strategy is working, as we execute it in a dynamic environment,” said CEO John Donahoe.

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Joe tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Nike. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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