Fears that Nike (NKE) had something to hide by announcing its Q2 earnings on a Friday after the bell were firmly put to rest when the Swoosh brand posted results that solidly beat analyst expectations. The sportswear giants’ Q2 revenue came in at $11.2 billion vs. $10.55 billion expected and $10.33 billion year over year. Earnings per share came in at 78 cents vs. 62 cents expected and 70 cents year over year.
Digital sales and China emerged as the twin pillars lifting Nike’s Q2 earnings. Digital sales increased by 84%, representing the third straight quarter of roughly 80% growth, and Greater China led all regions with revenue growth of 24%. Greater China had its first-ever $2 billion quarter, a far leap considering in February the Nike shut down most of its stores in China due to COVID-19.
“Speaking of Greater China, the growth we saw there in Q2 was evidence of the progress we’ve made toward our end-to-end digital transformation, which allows us to better manage volatility and deliver strong growth,” said Nike CEO John Donahoe in the company’s earnings call.
“Our success in Greater China was also driven by a triumphant Singles Day, in which Nike yet again was the #1 sports brand with the highest store demand and highest traffic on Tmall.”
The Swoosh brand’s success in China was not all digital. The company saw year-over-year growth in traffic at Nike-owned stores in the country. Donahoe noted that China is the only marketplace where the company has seen a continued sort of trajectory in managing COVID-19.
No one can argue that the COVID-19 pandemic didn’t play a significant role in Nike’s digital growth in the last two quarters. However, the company’s “end-to-end digital transformation” has been years in the making. Digital is not merely a strategy for Nike, it’s become a way of life — a prime example being the digital-first launch of the LeBron 18 and the Kyrie 7.
“Digital is now woven into everything we do as a company. It’s how we operate and prioritize, from how we engage with members, to how we operate our supply chain, to how we serve consumers in the marketplace,” said Donahoe.
Though Nike’s digital prowess puts it in a class of its own, Donahoe was humble, recognizing that the picture might not always be this rosy.
“This growth won’t always be so uniform, but we are growing the pie and taking share from the competition.”
Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.
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