Image source: Nike
June 25 (Reuters) – Shares of Nike Inc surged 12% in premarket trading Friday and were set to open at a record high after the sportswear giant forecast full-year sales of more than $50 billion, riding on pent-up demand for sneakers and athletic gear from U.S. shoppers.
The company's fourth-quarter revenue also nearly doubled, topping $12 billion for the first time and overshadowing a weaker-than-anticipated performance in its fast-growing China market.
"The strong momentum in Nike's brand globally is more than offsetting pressure in China and supply chain constraints," Telsey Advisory analyst Cristina Fernandez said.
A rapid vaccination drive and the easing of restrictions in Europe and the United States have encouraged people to go on a shopping spree, unleashing unprecedented demand for expensive items, including sneakers.
Those factors helped Nike more than make up for weak China sales, which were hit by calls to boycott global brands for their comments around forced labor in Xinjiang. read more
Still, analysts are optimistic of a swift demand rebound in the region as company executives noted that sales trends in China for June were already reaching 2020 levels.
"We're confident about what we're seeing in China … We've been in China for over 40 years … And today, we're the largest sport brand there," Nike Chief Executive John Donahoe said on Thursday. "We're a brand of China and for China."
At least 12 brokerages raised their price targets, with Jefferies' new $200 target making it the second-highest on the Street. The median target is at $174.
Germany's Adidas and Puma were up about 5% and 2%, respectively, while U.S. footwear retailer Foot Locker rose about 3% .
"[The results] are a confirmation of very supportive global demand trends, a recovery in China and the potential for sizeable margin expansion to come in the years ahead," Jefferies analyst James Grzinic said.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D'Silva.