Nike (NKE  ) has almost become two businesses in one. It has its legacy business of selling shoes through its distribution channels which are physical retail that include its stores and other retailers. The newer, more exciting business is its online, direct-to-consumer sales channel that it's building. This channel is going to drive the company's future growth.

Inside the Numbers

In the last quarter, Nike's online sales grew by 82%. It also issued guidance that was better than expectations for online sales in the fourth quarter. Nike also issued 2021 guidance that was above analysts' expectations with the company projecting high single-digit to low double-digit revenue growth. The company also noted a strong rebound in sales in Asian countries.

Earnings per share for the quarter were $0.95 vs $0.47 expected. Revenue also beat at $10.6 billion vs $9.2 billion expected. Compared to last year, Nike topped earnings by just over 10% and revenue was slightly under. All in all, this is an impressive recovery given that retail is still Nike's primary distribution channel and retail foot traffic remains well-below last year's levels.

Sales in China were up 6%, while North American sales were down 2%. In its stores, traffic was down but conversions were up since people aren't going out anymore to browse. Additionally, revenue per customer was higher as well.

Stock Price Impact

The coronavirus has been a catalyst for Nike's online business. Its management has commented that it's pulled forward its growth estimates for 2023 into 2020. The company will likely be able to retain some segments of these new customers. Online buyers will be likely to spend more and are higher-margins than selling through a third-party.

Digital sales now account for 30% of total sales. This is probably behind the jump in Nike's stock price. Nike's investments in e-commerce and its digital sales channel are starting to yield positive results and are being rewarded by Wall Street.

Investors are also not punishing Nike for its drop in revenue over the last couple of quarters. Instead, the stock is making, new all-time highs on the backs of its online sales growth. Margins on these items are higher, there's an increased chance of customer retention, and average transaction size can be expected to increase as well.