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Trends & Analysis
News

Week Ahead Preview: 17th of February

News

Europe stocks hit record high on strong earnings

News

BRIC currencies mostly gain as US inflation rises

News

Refresh your portfolio with Coca-Cola?

News

GBP/USD price may rally to multi-week high

News

EIA ups oil output forecast, but supply fears loom

News

Nike’s shares slide despite earnings beat

Wednesday, October 02, 2024

Today’s headlines

What’s happening: Shares of Nike Inc fell during the after-hours trading on Tuesday, following the release of the company’s fiscal first-quarter results.

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

However, Nike failed to meet the sales estimates for the quarter and withdrew its annual revenue guidance, which exerted pressure on the stock.

How were the results: The Beaverton, Oregon-based company has now missed revenue expectations in four of the last five quarters.

  • Revenues contracted by 10% year-over-year to $11.59 billion, missing consensus estimates of $11.65 billion.
  • The company posted quarterly earnings of 70 cents per share, topping Wall Street expectations of 52 cents per share.

Why it matters: Nike witnessed a decline in traffic across company-owned stores and websites, which resulted in an inventory backlog. The company’s sales fell, despite higher promotions at stores by its partners.

Last month, Nike announced plans to bring back Elliott Hill to replace John Donahoe as CEO in mid-October.

Nike’s North America sales fell around 11%, while Greater China sales declined about 4% during the quarter. European sales contracted by 13%, while Asia Pacific and Latin American sales declined 7%.

Nike Direct revenues fell 13% to $4.7 billion in the quarter, while Nike Brand revenues declined 10% to $11.1 billion and Wholesale revenues slipped 8% to $6.4 billion.

“A comeback at this scale takes time, but we see early wins — from momentum in key sports to accelerating our pace of newness and innovation,” CFO Matthew Friend said.

Management guided to a decline in sales between 8% to 10% in the September to November quarter, compared to market estimates of a 7% contraction. They also projected gross margins to contract by around 150 basis points.

How shares responded: Nike’s shares fell 5.9% to close at $83.85 in extended trading hours on Tuesday, following the release of quarterly results. The stock has lost more than 16% year over date.

What to watch: Investors will watch the upcoming holiday season, which is expected to result in bigger discounts on the company’s website and mobile apps.

The markets today

The Canadian dollar in focus today after recording gains on Tuesday

Context: The CAD/USD forex pair moved higher on Tuesday amid an increase in oil prices.

Details: The price of crude oil, one of Canada’s major exports, strengthened on Tuesday with rising geopolitical concerns. WTI crude oil futures settled sharply higher at $69.83 per barrel during the session.

Investors also assessed domestic data, which showed the S&P Global Canada manufacturing PMI rising to 50.4 in September, from 49.5 in the previous month. This represented the first improvement in the region’s operating conditions since April 2023.

The Bank of Canada had last month reduced its key policy rate by 25bps to 4.25%. The Federal Reserve soon followed suit, announcing a larger 50bps cut in its benchmark interest rate.

The CAD/USD forex pair gained to 1.3494 on Tuesday, rebounding after falling to its lowest level since September 24 earlier in the session.

The S&P/TSX Composite Index rose 0.1% to settle at 24,034 on Tuesday, as gains in the shares of heavyweight commodity producers were offset by a decline in mega-cap stocks.

What to watch: With no major economic data due today, investors will monitor economic data from the US, which is expected to provide some direction to the CAD/USD forex pair. Data on services and composite PMI from Canada will be released on Thursday.

The S&P Global Canada composite PMI, which rose to 47.8 in August, is expected to improve further to 48.4 in September. Analysts expect the services PMI to increase to 48.6 in September, from 47.8 in the previous month.

Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.41%, 0.93% and 1.43%, respectively.

The news shaping the markets

Russia said it has captured Krutyi Yar in Ukraine’s Donetsk region and Vyshneve in its northeastern Kharkiv region. The news sent the RUB/USD pair higher in forex trading this morning.


Australia’s CoreLogic Home Value Index rose 0.4% in September, lending support to the AUD/USD forex pair.


South Korea’s annual inflation rate eased to 1.6% in September, from 2% in the previous month. Inflation slowing for the third month in a row sent the KRW/USD pair higher in forex trading this morning.


Brazil’s S&P Global manufacturing PMI climbed to 53.2 in September, from 50.4 in the previous month, lending support to the BRL/USD forex pair.


US crude oil inventories fell by 1.5 million barrels in the week ending September 27, after a decline of 4.339 million barrels in the previous week, which sent the WTI crude oil prices higher in forex trading this morning.

What else to watch today

Spain’s unemployment change and tourist arrivals, Brazil’s IPC-Fipe inflation and industrial production, Italy’s unemployment rate, Eurozone’s unemployment rate, US MBA mortgage applications, ADP employment change, crude oil stocks change, gasoline stocks change and distillate stocks, Mexico’s business confidence and gross fixed investment, Russia’s business confidence, real wages, retail sales and GDP, as well as India’s money supply M3.


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