Publish date:

Nike Races To Record High After Earnings Blowout, $50 Billion Sales Forecast

Surging fourth quarter gross margins and record overall sales offset a modest slump in China pushed Nike shares to a record high at the opening bell Friday.

Nike Inc  (NKE) - Get Report shares look set to open at an all-time high Friday after the world's biggest sports apparel group forecast 2022 sales of more than $50 billion on the back of better-than-expected fourth quarter earnings.

Nike said earnings for the three months ending in May came in at 93 cents per share, up from a loss of 51 cents last year and smashing the Street consensus forecast of a 51 cent profit. Group revenues, Nike said, rose 95.5% from last year to $12.34 billion as consumers rushed to buy sports and fitness gear amid fading pandemic restrictions in major economies around the world.

Gross profit margins were also moving north, rising 8.5 percentage points to 45.8%, thanks in part to a surge in higher-margin online sales. 

Looking into its coming fiscal year, Nike said its sees sales rising in the double-digit percentage range, a pace that would take overall revenues past $50 billion for the first time in the company's history. 

TheStreet Recommends

As we look ahead to fiscal ’22, the opportunity ahead of us is significant. We remain very confident in our long-term strategy and our growth outlook. The structural tailwinds we discussed before, including the return to sport and permanent shifts in consumer behavior toward digital and health and wellness continue to create energy for us," said CEO John Donahoe. "And we remain focused on our largest growth drivers, including our women’s business, apparel, Jordan and international."

"Nike sets the pace through a continuous flow of new innovation, the world’s greatest roster of athletes and compelling experiences for consumers that create lifelong relationships with our brand," he added.

Nike shares were marked 14.75% higher in early trading Friday to change hands at $153.40 each, a move that would bump the stock into positive territory for the year. The stock traded at an all-time high of 154.18 earlier in the session.

"Gross margin improvement also reflects Nike’s continued shift to a more profitable NIKE Direct business and sustained strong full-price realization, partially offset by higher product costs, supply chain investments and the annualization of certain one-time benefits this year," said BMO Capital Markets analyst Simeon Siegel, who carries an outperform rating, with an improved $174 price target on the stock.

"Despite its already off the charts scale, management also provided an impressive multi-year/FY25 growth algorithm, detailed below, with outsized growth expected via Women’s, Apparel, Jordan, Digital and International," he added.