Categories AlphaGraphs, Earnings, Retail

Earnings preview: Innovation, digital push to drive Nike’s Q3 growth

After surviving the challenges posed by adverse market conditions, sneaker maker Nike (NKE) will be publishing its third-quarter earnings on March 21 after the regular trading hours. It is widely expected that revenues will grow 6.5% year-over-year to $9.57 billion, with strong contributions from the footwear segment. Analysts are looking for earnings of $0.64 per share, down from $0.68 per share reported in the prior-year quarter.

Nike Q2 profit up 13%
Nike Q2 2019 earnings infographic

The results will be positively impacted by the ongoing recovery in the North American operations and the company’s digital transformation initiatives, which has been giving tough competition to rivals Adidas and Under Armour (UAA).

The general recovery of the sportswear market, catalyzed by the steady growth in the sales of leading apparel brands, bodes well for Nike which has been expanding its direct-to-customer channel aggressively. It needs to be noted that the company’s wholesale tie-ups with retailers like Foot Locker (FL), Nordstrom (JWN) and Dick’s Sporting Goods (DKS) are working well.

In the second quarter, double-digit growth in the sales of apparels and footwear drove up earnings by 13% annually to $0.52 per share, while revenues jumped 10% to $9.4 billion. The management has been betting on the company’s expanding supply chain and innovations in the product pipeline –  with focus on off-the-court models – to improve performance in the current fiscal year.Under Armour last month reported a 2% increase in fourth-quarter revenues to $1.4 billion, which resulted in flat earnings. A further slump in the Americas was more than offset by the positive outcome in other markets. Meanwhile, North America continues to be a challenging market for most sportswear companies, due to the growing competition and people’s fast-changing shopping habits.

Related: Nike Q2 2019 Earnings Conference Call Transcript

Nike was in news for the wrong reasons recently, after Duke basketball player Zion Williamson’s sneaker exploded during a game, causing minor injuries to the player. However, the incident had minimal impact on the stock, which bounced back quickly from the initial dip that followed the report.

After falling to a six-month low towards the end of last year, the stock regained strength at the beginning of 2019 and reached a record high this month. It has gained 30% in the past twelve months, outperforming the S&P 500 index.

 

We’re on Apple News! Follow us to receive the latest stock market, earnings, and financial news at your fingertips

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “Earnings preview: Innovation, digital push to drive Nike’s Q3 growth

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment
Loading...

Cancel
Viewing Highlight
Loading...
Highlight
Close
Top