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What's going on?
Nike just did it! Its stock hit a slam-dunk, rising by 11% on Friday after the company reported better-than-expected quarterly results (tweet this).
What does this mean?
Nikes had some traction its most recent quarter, growing both its sales and profits compared to the same time last year. Importantly for investors, sales in North America were 3% higher than a year ago having fallen for most of the last twelve months as customers favored kicks like Adidas Yeezys and Pumas Fentys over Nikes Air Jordans. Some 40% of Nikes annual revenues come from North America, so sales growth swooshing on up in the region is important for the company.
Why should I care?
The bigger picture: Nikes digital strategy is running.
Nikes digital sales grew by 34% in the last quarter its now the fastest growing way by which the company sells its wares. Nikes been selling more via Amazon (some brands swear they never will), as well as buying tech businesses to help it get to grips with its ecommerce transition. And Nikes been using social media too, to reach runners and sneakerheads for all-important drops.
For markets: Nikes shares took to the Air.
Nike also said its expecting to grow its sales for the year ahead even faster than it previously thought, in part leading analysts to reassess their opinions of the value of Nikes stock and decide its now worth more and investors agreed as they shopped for Nike shares. Nike also announced it intends to buy back $15 billion worth of stock which usually results in the stock price rising because it simultaneously demonstrates the companys confidence in its own future prospects and creates more demand for its stock. Furthermore, those investors who keep their shares could end up owning a greater proportion of the companys future profits (since there will be fewer shares on the open market).
Originally posted as part of the Finimize daily email.
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