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Nike stock hits an all-time high as e-commerce powers through the pandemic

December 21, 2020, 4:43 PM UTC

Count Nike among the pandemic’s biggest winners.

The athletic-wear brand’s shares hit a new all-time high early Monday in their first trading session since Nike reported another set of stellar quarterly results. Those results, posted after U.S. markets closed on Friday, showed that Nike is navigating the pandemic exceptionally well thanks in large part to its digital prowess.

Nike shares rose as much 7.7% on Monday morning to hit $147.95, giving it a market capitalization of $228 billion. The shares have more than doubled in value since the pandemic was declared in March.

The secret? Nike has used digital firepower, from its e-commerce site to its fitness apps, to keep customers focused on its brand and to leverage the overall shift in spending toward athletic and casual wear during the pandemic. Nike’s already sizable e-commerce business grew more than 80% year over year for the third straight quarter.

Even as stores, of which 90% are currently open again, continued to see fewer shopper visits, e-commerce soared both in the U.S. and overseas. In China, for Singles’ Day, a November event several times larger than Cyber Monday in North America, Nike was the top athletic-wear brand, garnering the most visits in that category on Tmall, a massive online store there. In the U.S., Nike said it saw record online sales on Black Friday.

Nike CEO John Donahoe says the results show the company is taking market share from competitors. “These are times when strong brands get stronger,” Donahoe told analysts on a conference call on Friday afternoon after the results were announced.

Long before the COVID-19 outbreak began last year, Nike had been making large investments in e-commerce: By selling far more of its products to customers directly, the company aimed to offset a recent move to cut its exposure to a number of wholesalers, such as department stores.

But Nike has also spent a lot of time and money on its apps for shopping and offering workouts. In its previous quarter, whose results were reported in September, e-commerce passed the 30% threshold as a percentage of Nike’s sales, a mark it had previously expected to hit only in 2023.

“The consumer shift to digital is permanent, and our digital penetration will only increase in years to come,” Donahoe said on Friday.

The result has been less reliance on physical retail at a time when many shoppers are still avoiding stores. Nike’s overall revenue for the quarter rose 7% year over year on a constant-currency basis, to $11.2 billion. That handily beat Wall Street projections for $10.55 billion. Meanwhile, net income grew 12% to $1.25 billion, reflecting Nike’s deft inventory management, which has reduced the need to sell anything at clearance prices, as well as its cost-cutting.

Wall Street expects Nike to further develop the winning formula of increasingly taking matters into its own hands through direct sales, both with its own stores and its e-commerce. “There are many benefits (financial and otherwise) to selling direct, and the channel mix will likely continue to swing in this direction for many years to come,” Pivotal Research Group wrote in a research note.