Nike
Year to date, Nike's shares are down 20% and 26% from all-time highs in November. Peak to trough, Nike's shares were down by 35% which is close to its pullbacks in early 2020 and 2018 that served as good entry points within its bull market.
Inside the Numbers
In its fiscal Q3, Nike reported $0.87 in earnings per share which exceeded analysts' estimates of $0.71 per share. Revenue topped expectations at $10.87 billion vs. $10.59 billion. Compared to last year, EPS was slightly lower, while revenue was 5% higher.
Despite the beat, management warned that the environment was challenging given the combination of inflation, geopolitical issues, and clogged supply chains. Another factor is that its Chinese business is facing a boycott in that country of Western brands which has caused sales to dip after being the company's biggest growth engine for many years.
Overall, North American sales were 9% higher. Sales in Greater China declined by 5%. For the current year, Nike sees mid-digit sales growth, in line with analysts' forecasts. The company said that sales would have been higher if the company had fully stocked inventories, but it sees the situation improving with all factories fully operational.
However, transportation issues remain elevated. The company is already working on fall inventory to ensure that products are available in time. Thus, inventories are also higher by 15% which accounts for some of the earnings drop. Gross margins increased slightly to 46.6% from 45.6% due to fewer discounts. Digital sales increased 19% due to 33% growth in North America as it continues to build out its direct-to-consumer sales channel which comes with higher margins and more opportunities for monetization.
