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Nike Forecasts Online Sales Boom for Post-Lockdown Fiscal 2022

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With pandemic restrictions gradually easing, people are getting ready to face life after the lockdowns. Simultaneously, athletic and lifestyle giant Nike is gearing up to prepare for higher demand through its online platform, forecasting a significant sales boom in the coming fiscal year.

Nike will continually implore its undisputed strategy of limiting in-demand products. The clothing and lifestyle company primarily experienced a 13% rise in shares after posting a report of its quarterly earnings and revenue, attracting more investors globally. According to Beaverton, Oregon-based Nike, the company is estimated to grow by low double-digits by fiscal 2022, surpassing over $50 billion. 

Experts are saying that the projected online sales boom can be attributed to the fact that people are ecstatic to go outside after a year of being confined to their homes. Consumers are now ready to pivot from their comfortable leisurewear to hitting the gym, running around the neighborhood, or hiking mountain trails—all the activities consumers missed out on during the lockdowns. Consequently, sneakers and athleisure wear play a big part in the upcoming transition. Hence, the rise in demand for Nike’s world-renowned products.

Furthermore, Nike’s CEO John Donahue said on Tuesday, “The accelerated consumer shift toward digital is here to stay. Digital is fueling how we create the future of retail.” The CEO also explained that Nike had gathered experts to work on their online platform. It has been strengthened so that others cannot easily replicate the system. “Simply put, scale matters, and Nike leads,” Donahue added. 

Rapid vaccination rollouts also contribute to the sales hike. As Nike’s Chief Financial Officer Matthew Friend said on an earnings call, the rising optimism and confidence among consumers will drive the brand’s sales to the roof. Even today, the company is already seeing a rapid acceleration in its performance.

Additionally, the sportswear giant has significantly retreated from department stores and turned towards online distribution channels. It also invested in its own neighborhood stores called Nike Live, where customers can also pick up their purchases. 

“Nike’s decision to evolve into a digital-first organization has proved prudent, as the crisis continues to push customers toward the digital channel,” said Susquehanna analyst Sam Poser in an interview with CNBC. “Digital momentum is sticky. Nike has embraced the structural shift of consumer shopping habits from traditional brick-and-mortar to digital and will, in our view, continue to capitalize on this shift.”

In North America alone, Nike’s most significant market to date, the fourth-quarter revenue more than doubled to $5.38 billion, beating analysts’ estimates at only $4.31 billion. The total gross margin also rose this year by 8.5 percent versus last year. This was due to the company’s direct-to-consumer strategy, creating lesser factory-related cancellations and returns. 

“Nike is a better, more profitable company today than it was a year ago. And there is quite a short list of entities that have been able to achieve that,” Deutsche Bank analyst Paul Trussell told CNBC. 

A year ago, according to IBES data from Refinitic, Nike nearly doubled its revenue to $12.43 billion, beating analysts’ expectations at $11.01 billion and earnings of 51 cents per share at the height of the pandemic.

Sources:

https://www.cnbc.com/2020/09/23/nikes-ceo-says-digital-is-here-to-stay-e-com-business-fuels-sales.html

https://ww.fashionnetwork.com/news/nike-gives-upbeat-five-year-forecast-online-sales-to-surge,884362.html

https://www.reuters.com/article/nike-results/update-3-nike-forecast-for-online-sales-boom-post-lockdown-demand-drives-shares-up-13-idUSL3N2O63ZI

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