Nike Full Year Numbers - Good Growth in Digital

Athletic gear maker Nike reported quarterly results last night, after the bell rang to signal the market close at 4pm on Wall Street. This was an interesting set of numbers. At first glance it was a miss, as they reported earnings per share of just $0.62 for the three month period ended 31 May 2019, below the market consensus expectation, which was around $0.66 per share. Initially, the stock weakened in after-market trading.

On closer examination, the results contained many positives, and the stock regained its prior levels of around $83.60 per share. They reported solid revenue growth in key regions of North America and China (up 22% compared to last year, with $1 billion more sales in that region). Importantly, management stated they saw no disruption in China growth from US-China trade tensions. In comments on the earnings call, Nike CEO Mark Parker said, "Nike says remains a brand of China and for China".

Standout performers in the largest North American market were basketball gear, general sportswear and Jordan shoes. Sales of sportswear to women were also strong, with growth accelerating in the back half.

Also, the vitally important digital-led direct to consumer (DTC) growth was very good. Digital sales grew 35% for the full year, and 20% of digital revenue comes from the SNKRS app alone.

I visited the new flagship Nike store in New York City earlier this month, it has six stories (including a below-street-level floor) and covers more than 6,300 square metres on the corner of Fifth Avenue and 52nd Street. To access stock in the store you had to use their mobile phone app. If you said to the sales staff, do you have this in a size 12 please, they said, c'mon man, look at the app.



Athletic gear is trendy, and increasing the pace of product innovation is a key focus at Nike. In running shoes, the new Air and React platforms are top sellers at top prices. Initiatives about to launch include something called "Joyride" cushioning and several new products for the 2020 Olympics. There is also an increased emphasis on sustainability. Well, of course there is.

This is a must-have stock in every investors portfolio. Onwards to $100 per share!