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Nike Reports Surprise Earnings Growth And Upgrades Full-Year Sales Forecast

Nike Reports Surprise Earnings Growth And Upgrades Full-Year Sales Forecast
The sale revenues for the entire current year would likely be better than the company had previously expected, the sportswear company Nike Inc said on Friday. The company also reported a third quarter of a surge in its online sales buoyed by growing demand for outdoor sportswear by consumers during the Covid-19 pandemic. 
The forecast resulted in a 5 per cent rise in the stocks of the Beaverton, Oregon-based Nike. The company stocks have gained a total of about 37 per cent so far this year.
People stuck at home from most of the time because of the novel coronavirus pandemic have been forced to take up exercising activities such as running and biking which provided a much needed spurt to Nike and other sportswear makers after the companies suffered due ot the pandemic at the beginning of the year.
There was also a huge surge in the number of people logging into Nike's workout and store apps as they were locked indoors due to pandemic related restrictions on them. That spurt in online activities by consumers also resulted in a significant surge in the company’s online sales throughout the pandemic period so far this year.
According to Jessica Ramirez, retail analyst at Jane Hali & Associates, Nike is currently benefitting from the time and resources that it had invested in propping up its e-commerce channels and had also provided a much needed competitive edge to its over its rivals such as Adidas.
"Nike's website is promptly updated and easy to browse, its app is intuitive and its focus on gathering customer data through its various services has really helped it target the right consumers at a time when people are more cautious with their spending."
The company also expects its revenue growth for the entire year to be in the "low-teens" which was an upgrade from its previous forecast of a high single-digit to low double-digit growth, said the biggest athletic apparel company of the world.
The company reported a jump of 84 per cent in its digital sales with North America, its biggest market, clocking triple digit growth in Nike’s online sale while other parts of the world also reported strong double digit increases.
In the second quarter ended November 30, the company also reported a 9 per cent jump in revenue rose to $11.24 billion. In comparison, according to IBES data from Refinitiv, analysts on average had expected $10.56 billion in revenues.
A 12 per cent growth in its profits was reported by the company in the same period at $1.25 billion, or 78 cents per share, which comfortably beat expectations of analysts at 62 cents per share. The company also reported a 2 per cent drop in its selling and administrative expenses to $3.3 billion which also helped the company to boost its profits as the company was prevented from spending as much on marketing its brands and sports events.

Christopher J. Mitchell

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