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Tuesday, December 5, 2023

Nike shares surge as return of pro sports boosts outlook

Shares of Nike skyrocketed Thursday on blowout earnings propelled by gains in direct sales to consumers and positive momentum from the return of professional sports.

The sportswear giant scored record quarterly revenue earnings in North America and also benefited from a big jump in sales in Europe, Middle East and Africa compared to the same period last year, when Covid-19 restrictions were most severe.

Higher revenues also helped offset the effects on higher spending on marketing in connection with major sporting events such as this month's NBA playoffs and Euro 2020, where the company is a sponsor of Cristiano Ronaldo and of several teams still in contention.

"We're proud that more goals have been scored using Nike boots than all the others combined," said Chief Executive John Donahoe on an earnings conference call.

Nike's profits for the quarter ending May 31 was $1.5 billion, compared with a loss of $790 million a year ago.

Revenue nearly doubled to $12.3 billion.

Executives also outlined a plan for strong performance through fiscal 2025, projecting annual sales growth of high single digit to low double digit growth. 

The outlook reflects the benefit of investments in Nike's direct-to-consumer efforts, which have accelerated during the pandemic and as some traditional retailers have gone out of business.

The company forecasts fiscal 2022 sales of more than $50 billion, said Chief Financial Officer Matt Friend.

Shares jumped 12.1 percent to $149.71 in after-hours trading.

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