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Nike Is Making Progress In Greater China, Digital Sales

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Nike Is Making Progress In Greater China, Digital Sales

Nike Inc’s (NYSE: NKE) 10-Q filing revealed that 95% of company-owned and partner stores have reopen in China and the company experienced an increase in retail traffic on a week-over-week basis in early April, according to BofA Securities.

The Analyst

Robert Ohmes maintained a Buy rating for Nike, reducing the price target from $95 to $90.

The Thesis

Nike is witnessing impressive momentum despite the COVID-19 headwinds, Ohmes said in note.

The company’s fiscal third-quarter revenues from Greater China declined 4%, due to a 5% downturn in wholesale sales amid the COVID-19 outbreak. Ohmes said that although Nike’s direct-to-consumer sales declined 3%, this was partially offset by 32% growth in digital.

Nike’s revenues from North America grew 4%, with a 1% decline in wholesale sales which was offset by 15% growth in direct-to-consumer sales, driven by 33% growth in digital sales and a 6% increase in same-store sales.

Ohmes expects the company’s North America revenues to decline by 46% in the fiscal fourth quarter, given the ongoing company-owned and partner store closures due to the coronavirus crisis. This is likely to be partially offset by strong growth in digital.

“We believe NKE is the key brand that wholesale customers will shift orders to in times of distress. NKE also has the most dynamic sourcing capabilities compared to other athletic brands,” Ohmes wrote in the note.

Price Action

Shares of Nike had risen 1.3% to $86.39 at time of publication.

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Latest Ratings for NKE

DateFirmActionFromTo
Dec 2020Raymond JamesMaintainsOutperform
Dec 2020NeedhamMaintainsBuy
Dec 2020Credit SuisseMaintainsOutperform

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