BofA Securities analyst Lorraine Hutchinson reiterated Nike Inc
The analyst thinks upward estimate revisions are unlikely, as uncertainty in China and the challenging U.S. wholesale environment are offsets to potentially stronger gross margins.
The analyst forecasts 1Q EPS of $0.70, in line with implied guidance but below Visible Alpha consensus of $0.76.
The analyst's F24 EPS of $3.71 implies 15% EPS growth and assumes improving fundamentals in 4Q.
Nike could make up any sales shortfall with stronger gross margin from freight recapture and can flex SG&A lower if needed to maintain EPS, noted the analyst.
NKE sportswear and footwear sales on Taobao and Tmall increased 8% in 1Q24 compared to a 24% rise in 4Q and 6% in 1Q23.
Given the choppy data points and volatile macroeconomic environment, the analyst lowered Greater China constant currency sales forecast in 1Q to 10%.
Datapoints from athletic sportswear companies over the last several weeks indicate that the industry remains promotional, opined the analyst.
The analyst is wary of promotions continuing into the holiday season and thinks the margin recapture opportunity from lower promotions could be pushed out to F2H.
Price Action: NKE shares are trading lower by 0.27% at $94.36 on the last check Wednesday.
