The coronavirus pandemic made revenue and profit growth much harder to find for investors, but there have been outliers maintaining growth through the worst of the outbreak. Here are two examples.
The iconic athleisure brand Nike (NYSE:NKE) is among the most stable and consistent revenue growers on the public markets. Sales for the quarter that ended in February grew by 7%, and earnings rose by a strong 15% (not including one-time costs associated with selling its South American operations and switching to a distribution model there). Nike was able to effectively offset brick-and-mortar shutdowns by rapidly shifting inventory to online channels and growing digital sales by 36%.New CEO John Donahoe's past experience in leading eBay certainly provides valuable insight for streamlining Nike's shift to e-commerce; it shows in growth continuing despite a worldwide pandemic.
There is reason to think growth can pick up from here. With roughly 55% of Nike's sales coming from Europe and Asia, revenue for the latest quarter was severely challenged by shutdowns and travel restrictions on the two continents. The result: A 22-quarter streak of double-digit sales growth in Asia abruptly ended as revenue in Asia dipped 5% (Europe managed to grow 11%). With many of those stores open again, it's reasonable to think Nike will soon be back to its consistent and impressive global growth.
What about performance in North America? Nike's 38% revenue exposure to North America means the March-to-May quarter will include store closures in the U.S., Canada, and Mexico. The effect should be slightly smaller, due to the lower sales exposure. Be patient: Growth could remain below historic trends next quarter. In the long term, Nike's ubiquitous brand should make a recovery.
Next: Canada Goose Holdings (NYSE:GOOS). The Canadian fashion brand reported full-year financials this month. Sales grew 15.5% in fiscal 2020, and earnings rose 6.5% -- much better than competition such as Ralph Lauren.
Like Nike, Canada Goose does a large chunk of business in Europe and Asia, where the pandemic hit much earlier. But sales and earnings growth are expected to accelerate to 21% and 23%, respectively, next year on the strength of improving macroeconomic conditions and new product releases performing well early on (aside from winter jackets).
On the most recent earnings call, CEO Dani Reiss assured investors that operations were recovering and his team was through the worst of coronavirus.With $87 million in the bank, $160 million in undrawn credit, and a leverage ratio of just 1.1, Canada Goose's balance sheet looks safe.
Coronavirus was mentioned over 11,000 times in earnings calls last quarter. Executives are justifiably using the pandemic as an explanation for negative growth in sales and profit. Canada Goose and Nike both bucked the trend, and should continue to do so. Both iconic brands are poised for long-term growth going forward, regardless of economic conditions.