Ecommerce now represents 21% of Nike’s total direct-to-consumer revenue, with 40% of that coming from its mobile apps. The footwear retailer and manufacturer expects that number to keep growing as it focuses on its digital business.

Nike Inc.’s fiscal fourth quarter results could be a sign that consumers are opening their wallets more than expected as the pandemic eases in many parts of the world. Nike is No. 21 in the 2021 Digital Commerce 360 Top 1000.

The footwear retailer’s fourth quarter revenue skyrocketed 96% year over year to $12.3 billion, while full-year revenue increased 19% to $44.5 billion. The fiscal fourth quarter and fiscal year ended May 31, 2021.

“This full-year growth was led by our own digital business, which has now more than doubled versus fiscal 2019 prior to the pandemic,” said CEO John Donahoe on an earnings call transcribed by Seeking Alpha.

Nike’s direct-to-consumer online sales from Nike.com grew more than 50% year over year in fiscal Q4 compared with the prior quarter and 37% in the fiscal year versus the prior year. Plus, its direct digital business now represents 21% of its total revenue, which is a milestone the retailer has reached several years ahead of its prior plan, said Matt Friend, Nike’s chief financial officer.

40% of its direct-to-consumer digital business in Q4 came from its two ecommerce mobile apps, the Nike app and SNKRS apps, Donahoe said. Its SNKRS app, which enables shoppers to get coveted Nike sneakers earlier than other shoppers, led the charge. The app grew members more than 90% year over year in Q4 and had 80% growth in monthly active users, Donahoe said.

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“There is a fundamental shift in consumer behavior toward digital,” he said. “The pandemic has simply accelerated that. And that provides the opportunity for us to have a direct connection with consumers, which is increasingly important in a digital world where consumers, while they are going more digital, are focusing on fewer and fewer apps. And we are going to be one of the very few apps that have a direct connection with consumers, and that’s unlocking great growth.”

In addition, the number of consumers in Nike’s loyalty program has grown and are a huge part of its online sales: The number of buying members grew roughly 80%, Friend said. “[Nike’s] performance was propelled by our members across both digital and physical retail,” he said.

Nike is forecasting low double-digit sales growth in the current fiscal year, ending next May, executives said. Nike has been gaining momentum as sports leagues and events resume in the U.S. and Europe reopens for business, driving renewed demand for its sneakers and apparel.

“Nike is one of the best brands on the planet, the global consumer is very strong, the company is furthering its connection with its consumer through tech, and the company’s distribution model is moving away from wholesale,” Jefferies analyst Randal Konik wrote in a research note.

Nike reports global growth

The growth in sales isn’t just a sign the company has moved past pandemic challenges. Donahoe is also pushing to radically cut down on wholesale distribution by eliminating many of its retail partners in favor of more lucrative direct-to-consumer sales.

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“We are building a new financial model that will continue to fuel long-term sustainable, profitable growth,” Friend said on the call.

North America had previously been a problematic market for Nike, hindered by supply chain issues that kept products from reaching consumers. Some of those delayed shipments were bumped into this quarter, aiding wholesale revenue as U.S. states eased virus-related restrictions and many sporting events returned in full.

At the same time, Nike’s sales growth in Greater China, which had until recently led the company’s revival, is starting to cool off. Revenue climbed just 17%—and less when excluding currency swings—to $1.93 billion in Q4, missing analysts’ expectations of $2.25 billion. The results may reflect the impact of boycotts of Nike and other brands over corporate statements on forced labor related to cotton production in the Xinjiang region.

Still, Baird Equity Research analyst Jonathan Komp called the Greater China results “much better than feared.” The company forecasts growth in the low- to mid-teens in China over the long term.

Meanwhile, store closures persisted in Europe, the Middle East and Africa throughout the period. But Nike has been able to reopen almost its entire network, with 99% of stores in the region now fully operational or open with reduced hours.

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For the fiscal fourth quarter ended May 31, 2021, Nike reported:

  • Fourth quarter revenue is $12.3 billion, up 96% compared with the prior year and increasing 21% compared to the fourth quarter of 2019.
  • Nike’s direct-to-consumer fourth quarter sales increased 73% to $4.5 billion.
  • Net income was $1.5 billion, compared with a net loss for the fourth quarter of 2020 of $790 million.

For the fiscal full year ended May 31, 2021, Nike reported:

  • Full-year revenue increased 19% to $44.5 billion compared with fiscal 2020.
  • Nike’s direct-to-consumer revenue was $16.4 billion, up 32%.
  • Net income was $5.7 billion, up 123%.

Bloomberg contributed to this report.

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