Nike To Post Solid Earnings

Following a mixed fiscal first quarter 2018 earnings report that revealed disappointing gross margins for Nike Inc, the American sports apparel company is now expected to post a strong earnings this coming fiscal second quarter earnings report which will be released later this week.

During the previous quarter, Nike posted a year over year decline on its sales from North America with the company looking at the significant risk of losing a huge chunk of market share to top competitor Adidas which has been growing positively since the previous year. Because of this, Nike’s share price was then projected to decline below $50 per share which would be its lowest share price level in two years.

Nike’s diluted earnings per share for the fiscal first quarter was at $0.57 per share representing a decline of 22%. However, Nike Chief executive officer, chairman, and president Mark Parker stated that the company was able to capture near-term opportunities through their new Consumer Direct Offense with the company igniting Nike’ next horizon of global growth through the strength of their brand as they look ahead to the rest of fiscal 2018.

The company had a revenue of $9.1 billion from the previous quarter which is a mostly flat performance compared year over year on both a reported and currency-neutral basis while the Nike BRAND revenue came at $8.6 billion which is 2% higher year over year driven by growth in China.

Nike also stated that their global growth would also be driven by the power of their innovative products as well as the most personally and digitally connected experiences in the industry.

However, Nike shares has since then recovered by almost 25% primarily driven by Foot Locker Inc’s strong earnings which is one of Nike’s key retailers resulting into a renewed outlook for Nike investors.

Despite this, Nike is still expected to post a decline on its second quarter release during Thursday’s trading session with its earnings expected by some analysts to decline 18% year over year due to a consensus pulled down shortly after the commentary of its first quarter earnings.

During June this year, the Consumer Direct Offense has resulted into a new company alignment which allowed Nike to simplify its brand geography from previously standing at six geographies being narrowed down to four which includes North America, Europe, Middle East, and Africa.

For the fiscal second quarter, Nike Inc is expected to post earnings of $0.39 per share with the full fiscal 2018 earnings expected to come at around $2.46 to $2.50 per share while its earnings estimate for 2019 is expected to come from $2.78 to $2.80 per share.

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