HomeFinancial MarketsNike Stock Rises as Sales Surge

Nike Stock Rises as Sales Surge

Nike shares gained almost 13% in early trading on Wednesday following the company’s announcement that it has overcome its recent inventory problem. The company’s stock is still down by around 30% for the year.

“We believe the inventory peak is behind us,” CEO John Donahoe said of the company’s battle with eliminating excess inventory. “The actions we’re taking in the marketplace are working.”

Although still facing a $9.3 billion inventory issue which has resulted in smaller gross margins than the same period last year, the sports apparel company released favorable fiscal results. Nike’s second-quarter revenue hit $13.32 billion, thereby exceeding analysts’ estimates of $12.6 billion. Its reported adjusted earnings of $0.85 per share exceeded forecasts of $0.65 per share.

During Tuesday’s quarterly earnings call, Nike executives commented that the company’s struggles to beat back its inventory struggles are largely due to “unfavorable changes” in exchange rates as well as rising freight and logistics costs.

The company’s sales growth was largely driven by direct-to-consumer sales, which grew by 16% on a year-over-year basis. Standing at $5.4 billion, direct-to-consumer sales for the quarter fell about $25 million short of analysts’ estimates.

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