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Nike shares rise as pandemic fuels sneaker maker’s online growth, annual revenue outlook gets a boost

Nike’s earnings and sales topped estimates, driven by triple-digit growth online in North America and strong demand from Chinese consumers.

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A woman carries Nike shopping bags at the Citadel Outlet mall, as the global outbreak of the coronavirus disease (COVID-19) continues, in Commerce, California, U.S., December 3, 2020.

Lucy Nicholson | Reuters

Nike on Friday reported quarterly sales and earnings that topped analysts’ estimates, driven by triple-digit growth online in North America and strong demand for its sneakers and workout apparel from Chinese consumers.

It was able to cut expenses as it spent less on marketing during sporting events due to the pandemic. The lower costs boosted profitability. Strong sales during Alibaba‘s Single’s Day in China, and Black Friday in the U.S., also helped it barrel into the holidays with tighter inventories, reducing the need for discounting.

“These are times when strong brands get stronger,” Chief Executive John Donahoe said during an earnings conference call. “Permanent shifts toward digital, athletic wear, and health and wellness, continue to offer us incredible opportunity.”

With this momentum, Nike raised its fiscal 2021 outlook, calling for revenue to rise at a low-teens percentage year over year. Analysts had been calling for growth of 12.3%, according to Refinitiv. Donahoe said Nike’s profit outlook is improving, too, as it plans for less discounting in the coming quarters.

Its shares jumped more than 5% in after-hours trading.

Here’s how the company did during its fiscal second quarter, compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: 78 cents vs. 62 cents, expected
  • Revenue: $11.24 billion vs. $10.56 billion, expected

For the three-month period ended Nov. 30, Nike reported net income of $1.25 billion, or 78 cents per share, up from $1.12 billion, or 70 cents a share, a year earlier. Analysts had been calling for earnings of 68 cents per share.

Revenue grew 9% year over year to hit $11.24 billion, up from $10.33 billion a year ago. That was better than the $10.56 billion expected by analysts.

Nike said its digital sales for its namesake brand were up 84% during the quarter, as more shoppers visited its website during the pandemic to buy athletic apparel and footwear to keep up their fitness routines and personal health. That helped to offset declines at its wholesale partners, the company said, and in its own brick-and-mortar stores, with fewer people feeling comfortable leaving their homes to shop due to the global health crisis.

Even prior to the pandemic, Nike was shifting its investments toward its own stores, websites, and key wholesale partners, lessening its need on other retail partners.

“We’re going to be more aggressive in adjusting our plans,” with wholesalers, Donahoe said Friday. “As we look forward, we are going to be more aggressive with larger … customers that we have been working with, and we’re working closely with our strategic wholesale partners in a city-by-city, mall-by-mall, street-by-street basis to work together to determine how we’re going to recapture that demand.”

Sales at the Converse brand, which is owned by Nike, fell 1% during the second quarter. Nike said its women’s category grew faster than its overall business, thanks to the launch of new yoga gear and plus-size apparel.

In Greater China, Nike’s revenue grew 24%, compared with year-over-year growth of just 1% in North America.

With sales somewhat stagnant on its home turf, Nike has been doubling down on the China market, seeing the region as a key growth opportunity for the brand. Over the summer, it opened a new kind of store, called Nike Rise, at a mall in Guangzhou, which holds local meetups for its mobile-app users.

Nike said more than 4 million new customers purchased its products during Singles Day, a shopping event put on by Chinese e-commerce giant Alibaba. In all, Nike rang up over half a billion dollars in online sales during Singles Day, which occurs on Nov. 11.

The retailer also said it saw “record” sales online in the United States the week of Black Friday, but it didn’t disclose the exact amount.

“Our ability to reach consumers digitally in a variety of manners is just getting better and better as this pandemic goes on,” Donahoe told analysts.

Nike sits alongside Lululemon, Dick’s Sporting Goods and other retailers that sell workout gear and sports equipment that have rebounded more quickly this year. Other apparel retailers, particularly those centered around work wear and dresses, have struggled through the crisis. A number, like J.Crew and Brooks Brothers, have filed for bankruptcy.

Still, foot traffic at Nike’s stores in North America, Europe and Latin America remains down year-over-year due, in part, to social distancing measures, the company said. But customers who are venturing out to stores are more likely to buy, boosting overall conversion rates. Ninety percent of Nike’s stores are currently open, though some are operating on reduced hours.

“We think we’re better-positioned at this point to manage through the uncertainty probably than we were prior to the pandemic,” CFO Matt Friend said. “We’ve learned so much over the last nine months.”

As of market close on Friday, Nike shares have surged more than 37% this year. The company has a market cap of $215.5 billion.

Find the complete earnings press release from Nike here.

With this momentum, Nike raised its fiscal 2021 outlook, calling for revenue to rise at a low-teens percentage year over year. Analysts had been calling for growth of 12.3%, according to Refinitiv. Donahoe said Nike’s profit outlook is improving, too, as it plans for less discounting in the coming quarters.

Source: https://www.cnbc.com/2020/12/18/nike-nke-reports-q2-fiscal-2021-earnings-sales-beat.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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© 2021 CNBC LLC. All Rights Reserved. A Division of NBCUniversal

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

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Source: https://www.cnbc.com/earnings/

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