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Nike's digital transformation will increase future earnings

Release time:2020-10-24 Source:Dongguan Oukai Leather Co., Ltd

Even when the current epidemic has not passed, consumers still have strong demand for Nike products.

We believe that most of the future earnings per share growth will not come from sales revenue growth. On the contrary, we believe that Nike's digital transformation is very likely to increase its future earnings.

If Nike can achieve a comprehensive digital transformation, eliminate intermediate channels and sell directly to consumers, its profit margins will increase substantially.

Nike (stock code: NKE) is an interesting stock. At first glance, it seems to be seriously overvalued. But considering that Nike is still growing very fast, it needs to be reassessed. In this article, we mainly study whether Nike’s growth is fully reflected in the stock price; if not, whether there are potential investment opportunities.

From the perspective of short-term performance, Nike performed well in the first quarter of 2021 (as of August 2020), with overall revenue of 10.6 billion US dollars, the same as the same period last year. On the surface, Nike has benefited from the surge in sales during the epidemic, and its revenue has increased significantly from the fourth quarter of 2020. Many analysts have speculated that the soaring sales may be partly attributable to the use of idle funds during the epidemic to buy Nike sports shoes and other products.

After the outbreak, with the closure of most entertainment institutions around the world, some non-essential companies have gained part of consumer spending. Currently, in the United States, the government is discussing the next round of economic stimulus plan. If the US government introduces another policy that directly stimulates consumption, it may be beneficial to Nike, because there are too few other discretionary consumer choices, and tourism, restaurants, and live movie entertainment are still not fully open to the public. This means that even when the current epidemic has not ended, consumers still have demand for Nike's products.

Nike's revenue mainly comes from two channels, wholesale sales and direct-to-consumer sales. Nike’s direct sales this quarter were $3.7 billion, an increase of 13% over the same period last year. Although all Nike stores have opened in the first quarter of 2021, digital sales continue to perform well, an increase of 83% over the same period last year. Nike has always been a pioneer in digital transformation and customer relationship management.


Dongguan OK LEATHER was established in 2009 and its headquarters is located in Houjie Town, Dongguan City. It is a specialized leather enterprise integrating R&D, production, sales and service. The main products are all kinds of imitation leather, PU, PVC synthetic leather and high-end microfiber synthetic leather, which are widely used in shoes, bags, handbags, gloves, furniture, car interiors, decorations and other products. Products are mainly sold to the Pearl River Delta and European and American markets. We have become the designated supplier of well-known European and American brands (H&M, ZARA, ALDO, MANGO, NOVI, STEVE MADDEN).

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