Nike, Inc. (Nike), the leading sportswear manufacturing company, has recorded a substantial increase in its revenue at the end of the second quarter of the current fiscal financial year (FY) for 2020. According to Nike’s press release, after the closing of the second quarter of the FY which was ended on November 30, 2019, “The company’s revenue increased to $10.3 billion in the second quarter, up 10 percent on a reported basis and up 13 percent on a currency-neutral basis, driven by strong growth across all geographies.”
Overall performance Till Second Quarter
The report of Nike’s performance for the second quarter of FY 2020 was released on Thursday, December 19, 2019. As per its report, “The net income of the company rose to $1.12 billion, or 70 cents a share, in the second quarter ended November 30, from $847 million, or 52 cents per share, a year ago.”
The company gained revenue of about 10%, which accounts for $10.33 billion as compared to $9.37 billion a year ago, beating the expectations of $10.09 billion. Based on Refinitiv data, analysts expected that the per-share price of the company would be around 58 cents.
With this development, Mark Parker, the CEO of Nike, expressed, “In Q2, Nike has proven again that innovation is our greatest competitive edge- turning athlete insights into breakthrough product and digital services, as we offer more choice to more consumers at an accelerated pace.” The CEO added, “Our entire Nike team is fueling our current momentum, and I’ve never been more optimistic about the future of this company.”
Moreover, the sales of its Jordan brand’s products increased rapidly. Nike officials claimed, “Its Jordan brand had its first-ever billion-dollar quarter, thanks to new innovation and a spike in interest in the basketball-focused label, including among women and in markets outside the US.”
The company’s online sales increased by more than 70% during the holiday shopping season in North America. However, its overall sales in the region were lower than the analysts’ expectations. Nike could only attain sales of $3.98 billion against the expected figure of $4 billion.
Restructuring and Focusing on Digital Marketing
The former CEO of eBay, John Donahoe who is currently a board member of Nike, will replace the incumbent CEO Parker in January 2020. Parker, who has worked in the company for four decades, has been the core strength for Nike’s development. The out-going CEO explained to CNBC, “Donahoe will be able to help Nike focus more on digital growth, considering his professional background.” Parker further stated, “This (replacement) has been a thoughtful transition that has been planned for many months.”
The company has recently turned its focus on expanding its online sales operations. Mobile apps such as SNKRS will help increase the sales of Nike’s products. Earlier November 2019, Nike announced to sever ties from Amazon. Now, the company is focusing on limiting its wholesale partners and will work with key partners including Foot Locker, Nordstrom, and Dick’s Sporting Goods for selling Nike’s goods online.
Citing the increase in the company’s direct sales of 17% during the quarter, Andy Campion, the Chief Financial Officer of Nike, explained, “Nike delivered another strong quarter of accelerating, high-quality growth, driven by strategic and targeted investment in our digital transformation. As we deliver a relentless flow of innovation and scale Nike’s digital advantage, we are positioned for even greater competitive separation and long-term shareholder value creation.”
Nike officials expect that the company’s revenue is likely to grow till the end of the fiscal year 2020. The company’s shares, as per the figure available at Thursday’s market close, increased more than 36% this year which led to the current company’s capital valuation at roughly $157.9 billion.
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