Michael Jordan stopped scoring points in the NBA in April 2003, but Nike (NKE) is still slam dunking quarterly earnings in large part because of the staying power of the brand the NBA legend made famous.
On its fourth fiscal quarter earnings conference call, Nike executives casually mentioned Jordan brand sales rose an impressive 31% to $5 billion for the company's just completed fiscal year. For a bit of perspective, the Jordan brand now makes up greater than 11% of Nike's overall business. Nike rival Under Armour (UA) is expected to haul in $5.3 billion in sales for its current fiscal year — the Jordan brand alone is essentially one entire Under Armour.
Sales from Jordan's women's collections more than tripled in the fourth quarter, Nike said. Nike credited strength for retro Jordan sneakers (Air Jordan 1 and Air Jordan 11) and new releases under young NBA star Zion Williamson.
"The strong sell-through of Zion’s signature shoe collection demonstrates the continued love for Jordan Brands’ roster of athletes all over the world," gushed Nike CEO John Donahoe on the call.
Analysts remain impressed with the momentum of the Jordan brand and anticipate it continuing to be a key linchpin in Nike's earnings power in the years ahead.
"The Jordan brand shines," said BMO Capital Markets analyst Simeon Siegel in a research note to clients. "Momentum continues to be driven by the combination of brand heritage and innovation."
To be sure, Jordan isn't the only thing Nike has going for it — quite the contrary.
The athletic-wear giant reported record sales in North America for its fourth fiscal quarter as consumers continued to favor sporty looks and focused on health and wellness coming out of the pandemic. Sales surged 141% from last year, and 29% compared to the fourth quarter of 2019 (aka pre-pandemic). Digital sales soared 147% from the fourth quarter of 2019. Even China sales — where Nike has been swept up into consumer protests over its stance on Xinjiang — increased in all product categories in the quarter (led by a 34% increase in equipment sales).
Nike's stock jumped 15.4% to $154.35 on Friday's session, finishing at a record high. Investors also rejoiced over Nike's very upbeat full-year outlook. The company sees sales surpassing $50 billion for the first time and gross profit margins gaining in the range of 125 basis points to 150 basis points.
Added Siegel, "Nike's size and budget prove a key, long-term competitive advantage. The brand has no parallel in history when it comes to North America size/scope. With a leading ad budget fueling industry-leading dollar growth, we expect ongoing gains."
Siegel reiterated an Outperform rating on Nike and issued a $174 price target.
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