Nike predicted yesterday that fourth-quarter earnings
would be "below expectations ... because of cancellations of
some domestic orders, poor timing in shipments of products
to Europe, and an inability to fill demand for some of its
apparel lines," according to Jennifer Steinhauer of the N.Y.
TIMES. Nike said that it expects earnings of $.51 to $.56 a
share for its fiscal fourth quarter, which ends tomorrow.
Analysts had expected earnings of $.69 a share. Nike shares
yesterday fell $8.625 to $55.375 on the NYSE. The company
said that earnings "would be affected" by the shutdown of
its Bauer skate manufacturing plant in Ontario, and it will
take a pretax charge of $18M as a result (N.Y. TIMES, 5/30).
Nike was the most actively traded company on the NYSE
yesterday with 19,680,600 shares traded (USA TODAY, 5/30).
MORE NIKE: On "Nightly Business Report," Suzanne Pratt:
"Despite today's fourth quarter warning, Nike says its full
year performance will still be a record, with earnings and
revenues up by more than 40%, and in 1998, the company
expects revenue growth will exceed 15%" ("NBR," 5/29). Nike
said that more retailers "bought more items in advance," and
are making fewer "at once" orders, which retailers place
when items sell out, according to Charles McCoy of the WALL
STREET JOURNAL. McCoy: "That implies that retailers' sales
are lower than expected." Analysts "suggested Nike may have
priced shoes at a point where competitors can cut into Nike
sales" (WALL STREET JOURNAL, 5/30).
ANALYSTS REAX: Faye Landes, Footwear Analyst at Smith
Barney: "It will prosper over the long term. However, I
think at the very least I would want to wait to see the
effects of the slowdown of the United States cycle through"
("Nightly Business Report," 5/29). But Brett Barakett,
Footwear & Apparel Analyst at Salomon Bros., said, "Even
with the new numbers that Nike provided us with, it's a very
compelling buy opportunity for one of the world's great
brands" ("Moneyline," 5/29). Black & Co's Jennifer Black
Groves: "This company will surprise some people. There will
be growing pains as they try to keep up with their own
standard of growth. But this is a very strong brand and a
very strong company" (WALL STREET JOURNAL, 5/30). Other
shoemaker stocks fell Thursday on Nike's decline. Reebok
fell 1 1/2 to $39 3/4; Fila's ADRs lost 7/8 to $42 1/4; and
Converse was down 1 to $20 1/4 (USA TODAY, 5/30).
THE STRIP: Garry Trudeau continued to feature Nike in
"Doonesbury" today. The character of Kim asks, "Do you know
if you doubled the salaries of Nike's 30,000 employees here
[in Vietnam], the annual payroll would be about what the
company pays Michael Jordan?" (N.Y. DAILY NEWS, 5/30).
