Jordan Brand Leads Nike Resurgence in Sales and Shares
Nike’s fourth-quarter sales were almost double those of a year ago as the company reported its fiscal 2021 earnings to Wall Street on Thursday afternoon.
Revenue in the fourth quarter, ending May 31, was up 96% to $12.3 billion, helping the athletic goods maker post a 19% year-over-year sales gain to $44.5 billion. The business also trounced Wall Street estimates for net income with earnings per share of 93 cents for the quarter, compared to a 51 cents consensus profit estimate and a 51 cents net loss a year ago. Nike had full year per share net income of $3.56, up 123%.
“FY21 was a pivotal year for Nike as we brought our consumer direct acceleration strategy to life across the marketplace,” Nike president and CEO John Donahue said in the earnings press release. “Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE’s long-term growth.”
The company’s Jordan brand headlined double-digit growth of Nike-brand sales, which rose 17% to $42.3 billion. The Converse brand was up 16%, and Nike Direct, its direct-to-consumer strategy, posted a 60% rise in sales.
Jordan Brand Revenue Soars 31% to $4.7 Billion
Nike’s Jordan Brand continues its hot streak with revenue up 31% for the fiscal year ended May 31 to $4.7 billion. The gain comes on the heels of a 15% gain last year when the rest of Nike’s business was hammered by Covid-19 shutdowns: sales fell at each of the company’s other six business units.
The annual results are the one time a year Nike details its Jordan business, whose genesis was the signing of NBA icon Michael Jordan to a contract in 1984. Five years ago, former CEO Mark Parker laid out an ambitious goal for the brand to hit $4.5 billion in revenue in 2020, and the brand hit its mark thanks to its expansion into more women’s gear, non-basketball items and international sales.
The performance basketball shoe market peaked in 2015 and has experienced double-digit declines most years in the U.S. since then, according to market research firm NPD Group. It fell a massive 23% in 2020. But the “retro” or lifestyle business has more than made up for the declines and Jordan is the dominant player, with 96% of the market including Jordan and Nike brand sales.
“The retro product has done phenomenal,” Cowen & Co. analyst John Kernan told Sportico in April. “Nike is doing a lot of different colorways now, and they are launching product in very smart, very creative ways. They have done a masterful job managing the marketplace.”
Nike has signed a new crop of young NBA stars to promote the Jordan Brand in Zion Williamson, Luka Doncic and Jayson Tatum.
China Drag
Nike’s China sales were up just 9%, a dip from its pre-pandemic growth in the world’s most populous country. Nike was one of a number of apparel makers that faced boycotts in the country in the past few months after voicing concerns about cotton grown in the Xinjiang region, where the Chinese government is accused of using forced labor.
Nike shares rallied in after-hours trading in New York and continued through Friday morning, adding more than $20 a share to touch $153, a three-month high.
With assistance from Eben Novy-Williams.
(This story has been updated with Nike’s stock performance in the last paragraph.)
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