It’s Nike NKE! A loss is something that the 2,133% of stockholders aren’t accustomed to. Late on Monday, when the sports clothing giant’s fiscal fourth quarter came in better than predicted, they finally got some rest.
Sales of $12.2 billion brought Nike (NYSE: NKE) a profit of 90 cents a share.
By comparison, the company’s North American business was down only 5% in the second quarter of the year. Despite this, on a constant currency basis, the business saw sales rise by double digits in other countries.
Premarket trade on Tuesday saw the stock fall 2.5% to $107.77 per share.
Nike’s stock has grown around 90 percent over the last five years, beating the S&P 500 SPX –0.30%’s 60 percent growth. Since the pandemic, it has outperformed its rivals in the consumer-discretionary sector, with the stock hitting all-time highs.
Nike, which has lost a third of its value in 2022 while the market as a whole has dropped approximately 20%, has been one among the worst performers this year.
Analysts have been feverishly decreasing their predictions in the lead-up to the publication. Quarterly earnings-per-share forecasts have declined by more than 5% in the preceding month, according to FactSet, and they have dropped by 1.1 percent only this week.
Do you know what’s making you feel so bad?
Let’s start with China, where Nike has been implicated in the current controversy around alleged human rights abuses in Xinjiang province. Customers in the West claimed that the company didn’t go far enough to distance itself from Western criticisms over the treatment of the Uighur community.
In China’s zero-Covid policy, however, this has been mainly overshadowed by concerns over the continued destruction of demand. Adidas (ADDYY) reported a drop in sales in the area in its most recent earnings release last month.
But Nike has a lot of other issues to deal with as well. There’s skepticism among investors about the stock’s prospects in its native North American market.
Foot Locker FL –1.49 percent (FL) and the like have had solid quarters, but there is concern that customers would cut down on casual products, such as shoes, as inflation increases their sense of being squeezed.
In the wake of the epidemic, people stocked up on them, but they don’t match the style of holidays and weddings, which have returned to full force after a two-year hiatus. High clothing inventory at other shops has sparked worries about steep discounts.
Given the mixed earnings season for consumer firms, Nike’s top-and bottom-line beats were likely pleasant for investors, even though the company still faces headwinds.
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