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Nike Stock Surges On 70% Online Sales Jump (NKE)

nikeNike shares were up nearly 8% in the premarket driven by online sales that were up 70% last quarter and the rally continued through the day closing at $89.50 up 12% from yesterdays close.

Nike reported revenue of $7.98 billion showed at 15% growth year-over-year for the top line but in addition, it was ahead of the consensus set by analysts of $7.8 billion. Bottom line earnings for Nike were $1.09 per share, which is what helped significantly since analysts had only predicted a share rate of $0.88.

For eight consecutive quarters, Nike surpassed EPS expectations but its outperformance yesterday took everyone by complete surprise. Some experts feel expectations set by the analysts were somewhat too modest because the EPS a year ago for the same quarter was $0.86. However, because of what happened yesterday, Nike had a 27% year-over-year growth.

Because of Nike’s online offerings, customers have the opportunity to choose colors of shoes, literally from the bottom to the top. In addition, patterns and lace color can be selected based on individualized preference. Nike also offers a unique option of an inspirational message that can be sewn directly into the shoes’ tongue.

The expanded offerings by Nike’s online stores have pushed more women to buy and in fact, sales of gear for females are growing at much faster pace than it is for men. According to Mark Parker, CEO of Nike while on a conference call with investors, online sales of women’s apparel and shoes experienced significant growth.

Parker credited one of the reasons for the incredible growth on the Nike Plus Training Club application designed for women. Statistics show this particular application has now been downloaded 17 million times. However, a boost from the World Cup and Kevin Durant’s endorsement were also beneficial, as stated by president of the Nike Brand, Trevor Edwards.

While Nike was not an official tournament sponsor of the event, it did sponsor more teams than any other company to include the US men’s team. Compared to all other brands combined, there were more tournament players wearing Nike boots, added Edwards. Revenue was up across all of Nike’s categories but it was the sales of footwear that wound up being the most profitable, climbing 18%.

Growth in this quarter was seen in all categories and geographical sales areas, as well as for all product types, excluding golf and action sports. The first quarter’s standout region was Western Europe, which is the second largest geographical market for Nike by sales, growing overall 32% compared to the same quarter last year.

Sales in North America also rose by 12% and sales in China by 18%. The weakest growth rates for the company were in Japan, a country with the smallest geographical market by sales. In that part of the world, just 1% was spent by consumers throughout the last quarter, which was a reduction from a 4% growth rate in 2013.

Thanks to today’s solid gains, major indexes were not able to erase what was otherwise a tough week for stocks. Although most benchmarks finished with losses this week, Nike prevailed. The S&P 500 closed 16.86 points or 0.9% higher at 1,982.854, with a 1.4% lower week. The Nasdaq Composite gained 45.45 points or 1% to 4,512.19 and an weekly loss of 1.5%.

The Dow Jones Industrial Average actually jumped 167.35 points or 1% at 17,113.19 but yet it had a weekly loss of 1%. More than 100 points in each of the five sessions this week moved the blue-chip index and because of the 12% jump on better-than-expected results by Nike, 61 points were added to the Dow Industrials.

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