Nike: The Comeback Kid
Nike reported good earnings which significantly beat the street’s expectations, suggesting that the company’s logistics-related issues we highlighted in our last report appear to be behind it. The company reported EPS of 0.85 vs. estimates of 0.65 and revenues of $13.3B vs. estimates of $12.57B. Lower inventories ($9.3B vs $9.7B in Q2) suggest that the company’s strategy of selling direct to consumers is bearing fruit. We retain a buy rating for Nike.
Worst Month Since March 2020 | Nike
US markets (S&P 500 Index -1.5%) closed lower on Friday to register their worst month since March 2020, down -9.3%. It appears that the markets are coming around to the fact that the Fed will be holding interest rates higher for longer. There are also signs of financial stress building, highlighted by the actions of the Bank of England last week. Utilities (-2.0%) and Technology (-1.9%) stocks, led the market down on the day, with Consumer Discretionary (-1.8%) and Consumer Staples (-1.85) following closely.
Nike Inc: Pulling up their socks
Shares of Nike Inc fell sharply in aftermarket trading after missing on gross margin expectations. GM narrowed to 44.3% and mgmt reiterated that GM may decline another ~50bps this fiscal year. Revenue grew – up 10% on a currency neutral basis; Nike Direct sales were up 16% cur. neutral and Nike Online grew 23% cur. neutral. Inventory grew 40%. Diluted EPS were down 20% YoY (0.93), slightly beating analyst’s estimates.
