Nike (NYSE: NKE) shares skyrocketed over 5% on Monday amid the retailer’s most recent positive quarterly results and enthusiastic outlook. Investors proudly stood behind the company as not many others retailers were able to offer the same results throughout the coronavirus pandemic.
The multinational corporation revealed Friday that digital revenue had jumped 84% within the quarter ended November 30, that included Black Friday. The novelty, positions Nike for success during the holiday season as consumers flock to buy through online channels. Management believes e-commerce will account for half of the company’s sales soon.
“We foresee the shift toward digital being a multi-year sales and earnings driver, supporting the stock’s premium valuation multiple,” said Joseph Feldman, an analyst at Telsey Advisory Group, in a client note.
TAG increased Nike’s price target to USD175 from USD155.
“These are times when strong brands get stronger,” Chief Executive John Donahoe said on a conference call. Additionally, he mentioned that Nike’s outcome thus far was a result of its strong strategy and he was confident in the upcoming COVID-19 vaccine.
Nike plans to thin out its wholesale partners in order to sell more directly to shoppers as department stores battle to bring in customers. Nike aims to avoid becoming dependent on wholesalers as competitors Under Armour and Adidas have.
“Nike’s revenue results were nicely better than peers,” said BMO Capital Markets Simeon Siegel in a note to clients, furthermore that he believes Nike will “capitalize on share-taking opportunities amid pandemic dislocations.”
The company reported a net income of USD0.78 per share, on revenue of USD11.24 Billion, surpassing analyst expectations of USD0.68 a share and USD 10.56 Billion.
“We think we’re better-positioned at this point to manage through the uncertainty probably than we were prior to the pandemic,” Chief Financial Officer Matt Friend told analysts on Friday. “We’ve learned so much over the last nine months.”