What happened

Shares of Nike (NKE -1.26%) were soaring today after the sportswear giant smashed estimates in its fourth-quarter earnings report and offered guidance that was better than analysts expected. The report showed Nike executing effectively across all its categories and geographies, strengthening its lead in the sneaker and sportswear market.

The stock was up 13.4% as of 10:17 a.m. EDT, a huge gain for a blue chip stock like Nike.

An employee at Nike's House of Innovation in Shanghai

Image source: Nike.

So what

Against easy comparisons from the lockdown quarter a year ago, Nike posted 96% revenue growth to $12.3 billion, which crushed the analyst consensus at $11 billion. That figure was also 21% higher than its revenue in Q4 2019, showing that the company is well ahead of pre-pandemic levels.

Nike direct and digital continued to deliver standout growth with Nike direct sales up 73% to $4.5 billion, making up more than a third of total sales. Nike brand digital sales, meanwhile, jumped 41% from last year, and 147% from two years ago as its digital strategy has been a huge source of growth during the pandemic.

CEO John Donahoe said, "NIKE's strong results this quarter and full fiscal year demonstrate NIKE's unique competitive advantage and deep connection with consumers all over the world. FY21 was a pivotal year for NIKE as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE's long-term growth."

Now what

Looking ahead, the company expects revenue to grow by low double digits in fiscal 2022, topping $50 billion in the current fiscal year, which was ahead of analyst estimates at $48.8 billion and up from $44.5 billion in revenue in fiscal 2021. It also called for gross margin to increase 125-150 basis points as it shifts to the more profitable Nike direct channel.

By 2025, the company expects owned and partnered digital sales to make up 50% of the company's total sales with Nike digital contributing 40%. It sees Nike direct making up 60% of sales by then, which will drive EBIT margins to the high teens, up from 15% last year.

The quarterly report and the guidance show that Nike is on fire, posting strong sales growth, executing on its digital and direct strategy, and expanding margins. It's not a surprise the stock is up double digits today.