), a global leader in sports equipment and apparel, is expected
to report its financial results for the second quarter of fiscal
2013 after the market closes on Thursday, December 20, 2012. The
Zacks Consensus Estimate for the quarter is $1.00 per share, flat
compared to earnings in the prior-year quarter.
Currently, the Zacks Consensus Estimate ranges between 97
cents - $1.04 a share. For the quarter under review, revenue is
expected to be $6,019 million, according to the Zacks Consensus
With respect to earnings surprises, Nike has topped the estimate
in three of the trailing four quarters in the range of negative
14.6% to positive 13.4%. The average surprise over the last four
quarters remained positive at 1.3%.
First Quarter Fiscal 2013 - A Synopsis
Nike Inc. reported first-quarter 2013 earnings of $1.27 per
share, which ran past the Zacks Consensus Estimate of $1.12.
However, the quarterly earnings dipped 9% year over year
resulting from poor gross margin, higher SG&A and increased
Nike's total revenue augmented 10% to $6,669 million driven by
superior demand for Nike brand. Adjusting for currency effect,
the company's revenue grew 15%. Revenue for the quarter also
surpassed the Zacks Consensus Estimate of $6,438 million.
On currency neutral basis, revenue for Nike brands elevated 16%,
while other businesses delivered 9% growth. Revenue from Cole
Haan and Umbro, which are to be divested, was up 6%. During the
quarter, the company witnessed strength across all key categories
and geographies, except Japan.
Earnings Estimate Revisions
We do not see any major estimate revisions at this point for the
second quarter of fiscal 2013. Of the 15 estimates, only one
second quarter estimate was revised upward, while none moved in
the opposite direction in the last 30 days. In the last 7 days,
no movement in estimates was noticed in either direction for the
The magnitude of estimate revisions for Nike depicts a slightly
optimistic view for the upcoming quarter. Over the last 7 days,
estimates for the upcoming quarter remained unchanged, while it
rose by a penny to $1.00 per share in the last 30 days.
Recently, Nike successfully completed its previously announced
sale of Umbro to
Iconix Brand Group Inc.
) for $225 million. Further, the company is in the process to
dispose its Cole Haan affiliate brand to Apax Partners. The
company expects to close this deal by early 2013.
We believe the divestiture of these brands will help boost the
company's bottom lines. Meanwhile, in an attempt to expand its
global reach and market share, Nike is capitalizing on growth
opportunities in emerging markets, especially China.
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Additionally, Nike remains focused on other tools, such as a
direct-to-consumer business model, to expand geographically. We
believe that Nike's continued investment in China and focus on
the direct-to-consumer business will not only help in expanding
market share, but will also help strengthen its competitive
However, we prefer to remain on the sidelines given sluggish
discretionary spending, increase in operating costs, and the
ongoing European crisis. Nike faces intense competition in both
domestic and international markets from local as well as
established players, such as Adidas AG (including Reebok),
Brown Shoe Company Inc.
We retain a long-term Neutral recommendation on Nike. The company
currently has a Zacks #2 Rank, which translates into a short-term