Nike’s shares hit a new record

Shares in Nike Inc. hit an all-time high after the world’s largest sportswear manufacturer returned to profit and posted much better-than-anticipated revenue. It is a sign that the company is rapidly recovering from the coronavirus pandemic crisis.

According to Nike, revenue amounted to $10.6 billion in its first fiscal quarter, compared with analysts’ estimation of $9.110 million. The company posted earnings per share of 95 cents, beating the projection of 46 cents.

In the previous quarter, the company’s falling sales led to a surprise loss and hurt margins. Now, its turnaround appears to be making substantial progress, especially in China and through e-commerce.

John Donahoe, Chief Executive Officer, said that no one could match Nike’s new product creation pace. It has been sustained despite disruptions due to the health crisis.

Although sales fell about 1% from the previous year, Wall Street had prepared for something much worse. Nike also improved its margins more than expected, and direct sales increased by 12%.

Nike expects revenue growth close to 10% this fiscal year, with no change in gross margins. Executives said full-price sales wouldn’t see a sequential improvement until the second half of the year.

The positive results boosted other sportswear companies, including Lululemon Athletica Inc. and Under Armor Inc., which also saw a rise.

Nike has stepped up its efforts to sell more products directly to consumers, an initiative that has led to job cuts. Relying less on third-party retailers will benefit the Beaverton, Oregon-based company, both during the COVID-19 recovery and in the long term. Physical stores, especially those in shopping centers, were some of the hardest hit by the coronavirus.

Sportswear sales grew in China

Chinese sales increased by 6% in the quarter. The country was quicker to get out of lockdown, and the government is pushing citizens to exercise more.

In North America, where the response to the pandemic has had varying success by state, sales fell about 2%. The lack of sporting events has hurt demand for team-related apparel.