Apparel titan Nike NKE is gearing up to reveal its next set of quarterly results next Tuesday, reflecting one of the earlier releases we’ll get in the Q3 cycle.
The stock has been a big disappointment in 2024, down nearly 20% and reflecting one of the bigger large-cap underperformers. As shown below, shares have made a nice move off their lows, perhaps a signal of trend reversal.
Image Source: Zacks Investment Research
But do earnings expectations warrant further near-term bullishness? Let’s take a closer look at what’s expected.
Nike Earnings Loom
Concerning the knee-jerk reaction following Nike’s latest quarterly print, the company trimmed its FY25 outlook following challenges faced throughout the quarter. Analysts downwardly revised their earnings expectations for the upcoming release, with the $0.51 per share expected down nearly 40% over recent months.
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But it doesn’t appear that consumer weakness has been driving the retail giant's soft results but rather a reflection of consumers’ shifting preferences. CFO Matt Friend stated, ‘Although our digital business has grown at an approximately 26% CAGR since Fiscal 19, we missed our Q4 plan on softer traffic, higher promotions, and lower sales of certain classic footwear franchises.’
He continued, ‘Therefore, despite continued marketplace demand, we are advancing our timelines to tighten total supply of certain classic footwear franchises – at different paces, across different channels, around the world.’
The company remains focused on rebalancing its product portfolio accordingly, hoping to re-capture consumers through innovation. Sales expectations have been similarly taken lower, with the $11.6 billion expected reflecting a 10% pullback year-over-year.
Nike’s sales growth has taken a notable turn lower over the last several years, as we can see below. Please note that the chart below illustrates the % year-over-year change in sales, not overall quarterly sales.
Image Source: Zacks Investment Research
Putting Everything Together
With the Q3 earnings cycle just around the corner, many have shifted their focus to earnings. Apparel giant Nike NKE is among the batch of early releases, with its results expected on October 1st.
Expectations for the company have been taken considerably lower over recent months, with the company unable to attract consumers with its offerings.
While the stock is down considerably in 2024, investors looking for near-term gains would likely be better waiting for positive earnings estimate revisions to roll in, which could come following its upcoming release.
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