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Nike’s shares dip slightly despite upbeat results

Monday, December 23, 2024

Today’s headlines

What’s happening: Shares of Nike edged lower on Friday, after the company released its results for the fiscal second quarter.

What happened: The athletic footwear and apparel company reported stronger-than-expected sales and earnings for the latest quarter.

However, Nike’s sales declined in the quarter and management issued a muted outlook.

How were the results: The Beaverton, Oregon-based company reported a single-digit decline in sales for its second quarter.

  • Revenues fell 8% year-over-year to $12.35 billion, beating consensus estimates of $12.13 billion.
  • Earnings came in at 78 cents per share, which topped Wall Street expectations of 65 cents per share.

Why it matters: Nike has been struggling to regain its dominance in the market, with tough competition from peers launching more comfortable footwear. Nike launched new products like Air Max 95 and promoted staple franchises like Jordans to win back its customers.

The company reported a decline in sales in its major regions in the quarter, with sales in North America and Great China down about 8% each. Sales in Europe declined by 7%, while Asia Pacific and Latin American sales slipped 3% during the quarter.

Nike Direct revenues declined 13% year-over-year to $5 billion, while Nike Brand revenues fell 7% to $12 billion and Wholesale revenues slipped 3% to $6.9 billion in the second quarter.

Elliott Hill, who took over as CEO after the departure of John Donahoe in October, said, “We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value.”

Management guided to a decline in revenues by low double digits during the ongoing quarter, much worse than market expectations of around 7%. They also projected an acceleration in the revenue contraction in the fourth quarter, versus market estimates of a 6% decline.

How shares responded: Nike’s shares slipped 0.2% to settle at $76.94 on Friday, following the release of quarterly results. The stock has tumbled around 28% year to date.

What to watch: Investors will continue monitoring the strategy for the company’s turnaround by its new CEO. Markets will also watch new product releases by Nike as well as its competitors.

The markets today

The euro in focus today ahead of Spain’s GDP growth data

Context: The EUR/USD forex pair rose slightly this morning, after last week’s steep decline.

Details: The EUR/USD recovered slightly after declining to a two-year low on Thursday last week, following the US Federal Reserve’s interest rate cut announcement. The forex pair is down more than 0.6% over the past five trading days.

Data released on Friday showed consumer confidence in the Eurozone declining by 0.8 points to a reading of -14.5 in December, compared to market estimates of -14. The latest reading was the weakest since April this year.

Earlier this month, the European Central Bank lowered its benchmark interest rate by 25 basis points, in-line with market expectations. This was the fourth rate cut in the current monetary tightening cycle. Policymakers also signalled further rate cuts next year.

The ECB slashed its GDP growth outlook by 0.1 percentage points to 0.7% for the current year and by 0.2 percentage points to 1.1% for 2025.

Some strength in the US dollar also exerted pressure on the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.1% to 107.70 this morning.

The EUR/USD pair rose more than 0.1% to 1.0442 this morning, while the EUR/GBP forex pair slipped to 0.8298. The STOXX Europe 600 Index had declined by 0.88% to close at 502.19 on Friday, recording its second consecutive week of ending in the red.

What to watch: Investors await the release of economic data on Spain’s GDP growth rate (1200 UAE Time) today. Analysts expect Spain’s economy to expand by 3.4% year-over-year in the third quarter, the most since the first quarter of 2023, accelerating from 3.2% growth in the previous quarter.

Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.18%, 1.09% and 0.85%, respectively.

The news shaping the markets

The IMF announced the approval of budgetary support worth $1.1 billion to Ukraine in its war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.


Malaysia’s leading economic index fell by 0.4% in October. This being much lower than the decline of 2.5% recorded in September lent support to the MYR/USD forex pair.


The Bank of Jamaica lowered its monetary policy rate by 25 basis points to 6% as was widely expected. Despite the rate cut, the JMD/USD pair rose in forex trading this morning.


Argentina’s economic activity estimator fell by 0.7% year-over-year in October. This was better than the 2.5% decline in the previous month and market expectations of a decline of 2.2%, which lent support to the ARS/USD forex pair.


Canada’s government budget deficit shrank to C$1.5 billion in October, from C$7 billion in the year-ago month, sending the CAD/USD pair higher in forex trading this morning.

What else to watch today

Brazil’s current account (1530 UAE Time) and foreign direct investment (1530 UAE Time), Mexico’s balance of trade (1600 UAE Time), economic activity (1600 UAE Time) and mid-month core inflation rate (1600 UAE Time), Canada’s GDP growth rate (1730 UAE Time), manufacturing sales (1730 UAE Time), PPI (1730 UAE Time), raw materials prices (1730 UAE Time) and Bank of Canada’s summary of deliberations (2230 UAE Time), as well as US Chicago Fed National Activity Index (1730 UAE Time) and CB consumer confidence (1900 UAE Time).


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