Nike Inc expected to report a big hit in the second quarter sellas it provides depth discount on its shoes and sportswear to keep the benefits of recession alert shopper within its brand and clear excess inventory.
Analysts are predicting a nearly 11 percent jump in quarterly sales as a rebound in the company’s US business could help overcome weakness in the Chinese market.
“While retailers were initially worried about the amount of Nike inventory being shipped, consumers are showing up and buying the Nike brand,” Credit Suisse analyst Michael Binetti wrote in a note today. Friday.
“Most retailers are worryingly short of Nike inventory for two years and are happy to have enough to supply their clothing and footwear categories at this time,” Binetti said. “.
Brokerage consulting group Telsey last week said better-than-expected sales from retailers such as Foot Locker Inc and Dick’s Sporting Goods Inc pointed to Nike’s success in attracting shoppers weary of inflation by price cuts.
While those discounts have helped free up inventory at Nike, which had $9.7 billion in inventory at the end of last quarter, they could come at a cost, as analysts are predicting. lower profit target.
The lockdown in China in October and November is also expected to hamper its sales in the region in the second quarter. The company reported a 20% drop in revenue in Greater China in the same period last year and a 16% drop in the previous quarter ended Aug.
However, inventories are less, China reopens and demand from sneakerheads is expected to help the company have a better second half of the year.
On average, 26 analysts forecast Nike’s second-quarter revenue to grow about 11% to $12.57 billion, with sales in China expected to fall 6% and revenue in North America projected to grow. expected to increase by nearly 21%.
Q2 earnings per share are expected to hit 65 cents.
THE WALL OF LOVE
Shares of Nike are down more than 36% this year. By comparison, the Dow Jones Industrial Average fell about 9%, while the S&P 500 fell 19%.
Nike stock is rated “buy” by 38 brokerage firms, with 25 rating it “buy” or higher, 11 rating “hold” and 2 rating “sell” or lower.
At least eight brokerages have raised their price targets since early December and now have an average price target of $120, up from $110 in November.