Nike Uses Digital Sales Strength to Overcome Weak Backdrop
- Shares rise as much as 13% after better-than-expected results
- Digital sales grew 35% y/y, China moves to normalize economy
Nike Inc. climbed on Wednesday as the sneaker maker’s better-than-expected, digitally-driven third-quarter sales and performance in China, and commentary on what it learned there and in Japan and South Korea position the company to emerge even stronger after the Covid-19 crisis, analysts said.
The fact that Nike’s China revenue declined only 4% year-over-year in the quarter is “quite frankly incredible and speaks to the brand’s ability to manage through macro dislocation,” wrote Cowen analyst John Kernan.
By driving a “strong digital marketing campaign,” Nike e-commerce “remains open and in growth mode,” Chief Executive Officer John Donahoe said on the Tuesday evening conference call. In China, “at a time when people were confined to their homes, we moved swiftly to leverage our digital app ecosystem and Nike expert trainer network.” This resulted in an “extraordinary rise” in sign ups and engagement for Nike Training Club workouts in China, and weekly active users for all of its Nike activity apps were up 80% by the end of the quarter versus the beginning of the quarter.
China sales for the fourth-quarter are expected to be “flat” and should “return to growth in fiscal 2021, said finance chief Andy Campion, adding that the company will apply its same China “playbook” in regions around the world.