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Volume 25 No. 177
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Nike Reports Relatively Strong Q2, Concerns About Future Leave Some Investors Cautious

Nike on Thursday for Q2 "reported strong sales growth, but a dip in future orders coupled with underwhelming margin expansion tempered the outlook for the world’s biggest sportswear maker," according to Germano & Stynes of the WALL STREET JOURNAL. Orders of Nike apparel and footwear for delivery from December-April "grew 7%" from the year prior. However, that is "slower" than the 11% growth last quarter. Nike CFO Don Blair: "As long as we don’t see huge moves in the macroeconomics, we believe that we can continue to generate growth in the business." Sales "gained 15% from a year ago" to $7.38B for the period ended Nov. 30, while profits "increased 23%" to $655M (WALL STREET JOURNAL, 12/19). In Portland, Allan Brettman writes while most consumer product companies "would give their holiday bonus to turn in the kind of quarter Nike just produced," those companies "aren't Nike." So, instead of "being rewarded" for a 15% increase in revenue in Q2, Nike on Thursday "was dealing with disgruntled investors." Brettman notes revenues for Nike's Converse brand were $434M, up 24%, while revenues for all geographic categories "were up, including in one-time problem child China." The $758M in that "important region" was 21% higher than the same period last year (Portland OREGONIAN, 12/19).

BULL OR BEAR MARKET? Sterne Agee Managing Dir Sam Poser on Thursday said of Nike's trading trends on the NASDAQ, "The stocks moved almost 20 percent since the last earnings call. I think they're doing everything right. ... It just looks like it's pretty fairly priced." He added, "We've been on a phenomenal athletic run since the beginning of 2010 and I really believe that this run is going to continue through 2016. ... I believe there's a huge opportunity in China ... and Nike is doing a great job. You can see that they're doing a lot of damage because of adidas' inability to do anything" ("Fast Money," CNBC, 12/18). At presstime, shares of Nike were trading at $93.82, down 3.38% from the close of business on Thursday (THE DAILY).