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Update: Nike Shares Skyrocket to All-Time High In Biggest Trading Day Since 1987

Update, 5:50 p.m.: Nike shares hit an all-time high in Friday trading, ending the day up 16 percent to a record $154.35. It was the stock’s highest one-day increase since October 1987.

More than a year after a global pandemic that shut down stores and likely changed shopping habits at retail for good, Nike has clearly found its way back to connecting with consumers. The brand delivered its largest revenue total ever in a quarter yesterday — led by its e-commerce division and full-price sales in North America — and forecast that the first half of fiscal 2022 will continue the upswing seen in the latest quarter.

“Our team has proven their ability to be unrelenting and executing against the macro complexities, while also building the future,” said John Donahue, president and CEO, on a conference call with analysts and investors.

Nike shares surged over 14% in early morning trading to $153.41 as analysts cheered the results, including the company’s forward earnings and revenue guidance.

For fiscal 2022, Nike forecast revenue growth in the low double digits and plans for revenue to surpass $50 billion, “reflecting strong consumer demand across our operating segments as we lead with digital, scale Nike owned physical retail concepts and grow with our strategic partners,” said Matthew Friend, EVP and CFO of Nike, on the call with analysts.

He added that quarter-by-quarter growth will not “be linear” as the company normalizes “our post-pandemic business and continues to reshape the marketplace.” As a result, first half growth is expected to be slightly higher than in the second half of the year.

For 2022, analysts’ consensus is for revenues to hit $48.46 billion and earnings per share of $3.90.

Looking to long-term growth in fiscal 2025, Nike forecast revenue growth in the high single-digits to low double-digits on average. Sales from its digital and e-commerce business, called Nike Direct, are expected to jump to 60% of total sales, up from about 40% today.

“The Nike, Jordan and Converse brands will continue to strengthen, margins will continue to expand, Nike will continue take share and separate itself from its competition, and more undifferentiated retailers are at risk of losing the Nike’s brands,” predicted analyst Sam Poser from Williams Trading. Poser raised his per-share price target to $196, and lifted his fiscal year 2022 and 2023 Nike earnings estimates.

At Cowen Research, analysts also raised their future earnings estimates and upped their share outlook to $181. “Nike is the preferred athletic apparel brand across gender, all ages and income levels as it continues to build a moat around its brand through category offense, innovation (Jordan, Flyknit, Air, React) and cultivating digital connections with consumers (NikePlus),” the analysts wrote in a report.

Nike on Thursday posted net income of $1.5 billion, or 93 cents a diluted share, reversing a loss of $790 million, or 51 cents, in the prior-year quarter. Revenues in the quarter totaled $12.3 billion, nearly doubling from last year’s $6.31 billion.

Donahue said the Nike brand is only getting stronger — driven by digital growth, its women’s business, apparel, the Jordan brand and international — and that long-term prospects are more sustainable than ever before.

“Our strengths and proven playbook give us the confidence to move even faster to invest at even a more accelerated pace against the opportunities we see ahead,” Donahue said.

E-commerce sales, including apps, have doubled over the last two years to $9 billion, and with over 300 million Nike members, Donahue said membership has been a key driver of digital sales. The company now has “buying member growth is outpacing new member growth, signaling progress on a deeper member-led commerce funnel,” he said.

Among areas of focus, the company said it will continue to grow its women’s business through its Nike Live store format. The Jordan brand remains a focus, and management noted that sales rose 31% to nearly $5 billion in the year.

Addressing inventory levels, Friend said on the call that marketplace inventory was down double digits from a year ago. “Nike-owned inventory declined 7% with double-digit declines in closeout inventory. In-transit full price inventory remains elevated as we continue to experience longer end-to-end lead times for supply. We expect supply chain delays and higher logistics costs to persist throughout much of fiscal ’22,” Friend said.

Friend acknowledged that business in China was impacted during the quarter but said the company is committed and optimistic about the region. Nike and several other brands faced a backlash in China this spring after they took a stand about the alleged use of Uyghur forced labor in the production of cotton.

The company plans to open a new technology center in Shenzhen, he said.

“After a strong March, our business in Greater China was impacted in April, and we adjusted our operations by suspending marketing activities and product launches. We then began to see a recovery trend, improving to a single-digit decline in May and sequentially improving into June, with month-to-date retail sales trends approaching prior year levels.” Friend said. “We continue to invest in serving consumers with the best products Nike has to offer in locally relevant ways.”

Said Poser: “The ability to overcome weakness in China, Nike’s fastest growing market, highlights, in our view, Nike’s best in class global consumer engagement and its pipeline of compelling innovative product across merchandise categories.”

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