Nike’s Blowout Quarter Leads to New Stock High

Author: Tim Phillips

September 23, 2020

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Nike Inc (NYSE: NKE) saw shares climb 13% in after-hours trading on Tuesday, hitting a new all-time high, as the company reported a record profit.

Tim’s Take:

Just Do It. Nike clearly practices what it preaches as shares climbed to a record high on first-quarter (for the three months ending 31 August 2020) fiscal 2021 earnings that completely blew away expectations.

Perhaps the best measurement of how Nike surprised consensus was on earnings per share (EPS), which were 95 cents. That was more than double the expectation of 47 cents.

One of the big reasons Nike has been so successful (in an environment you’d expect it to suffer) has been its digital strategy. Early investment into a coherent online roadmap has paid off for the sportswear giant.

The litmus test for it came in the form of the Covid-19 pandemic. So far, it’s looking good for Nike on that front.

Smart distribution moves

The company increased its digital sales by an incredible 82% year-on-year in its latest quarter. Anyone who’s been stuck at home is probably familiar with the “Nike Training Club App” – just one example of how customers can interact with the brand digitally.

Nike has also implemented livestream workouts on its YouTube channel and introduced digital fitness challenges where key ambassadors – such as Lebron James or Cristiano Ronaldo – stream themselves doing their workouts.

It’s all part of the Nike aura and this is one company which has hit the nail on the head with its online strategy. 

For long-term investors who want access to a best-in-class consumer name that will continue to thrive in this “new normal”, you can’t go wrong with Nike.

Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.

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About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.