Nike Posts Gains in Second Quarter
Shares of clothing and footwear giant Nike (NYSE: NKE) traded up over six percent in the after-hours session on Thursday following a positive earnings report from the company.
Nike reported a second quarter earnings per share of $1.14, which is more than the $1.00 analysts estimated. Revenues were up seven percent to $6 billion, but still fell slightly short of the $6.1 billion analysts estimated.
The company saw gains across the board in all key categories, product types and geographies outside of China. This is in-line with the experiences of Yum! Brands (NYSE: YUM) and Tiffany & Co. (NYSE: TIF), both of which have significant exposure to the Chinese economy. Such results can be expected, given that the economic explosion in China has slowed in recent times.
Of important note is that the company is attempting to reverse its fortunes in the far east. On a conference call, Nike CFO Don Blair indicated that the company is taking “decisive actions” to position the company's China business for sustainable, profitable growth. He noted that Nike has made several moves to clear excess inventory in retail and manage the amount of new product flowing into the market.
As can be expected from the earnings report, analyst ratings on the firm range from Neutral to Buy. Sterne Agee offered a Neutral rating, stating “Nike is a great company but there are better places to put your money at this time.” Other firms offering a Neutral rating include Canaccord Genuity and Citigroup.
However, analysts at Bank of America are more optimistic and suggest buying Nike stock. ISI Group suggested purchasing shares as well, stating “Not only does it look like Nike has successfully course-corrected, but momentum is picking up steam driven by an amazingly robust North American business, steadily improving gross margins, and early signs that the worst in China has passed.”
Investors seem to agree with Buy ratings thus far. After trading up over six percent in the after-hours session on Thursday, Nike stock is again on the rise. As of this writing, shares are up five percent in trading on Friday.
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