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Nike’s shares slip despite strong sales

Friday, June 30, 2023

Today’s headlines

What’s happening: Shares of Nike fell in after-hours trading on Thursday, following the release of the company’s fourth-quarter results.

What happened: Although Nike reported better-than-expected sales for its fourth quarter, it missed earnings expectations.

The company also reported the slowest sales growth in its biggest market.

How were the results: The Beaverton, Oregon-based company reported single-digit growth in sales for the latest quarter.

  • Revenues grew by 5% year-over-year to $12.82 billion, topping the consensus estimates of $12.59 billion.
  • Earnings came in at 66 cents per share, which missed Wall Street expectations of 67 cents per share.

Why it matters: Soaring inflation has forced consumers to limit their purchases to essential goods and cut back their spend on discretionary items. While cost-conscious consumers in North America limited their sports apparel purchases, there was a strong rebound in China.

Nike’s sales in North America, its biggest market, rose 5% in the fourth quarter, representing the slowest growth in four quarters. Sales in Europe, Middle East and Africa rose 3%.

Sales in China grew 16% year-over-year to $1.8 billion, following the removal of covid-19 restrictions. Sales in the region had contracted during the first three quarters, resulting in Nike’s full year sales falling 4% to $7.2 billion.

Nike’s gross margins shrank by 140 basis points to 43.6% amid efforts to clear higher inventory by offering increased discounts.

Nike’s Direct revenue rose 15% year-over-year to $5.5 billion in the fourth quarter, while wholesale revenue declined 2% year-over-year to $6.7 billion.

Management guided to revenue growth of flat to up by low single digits for the first quarter, significantly below the consensus estimates of 5.8% growth.

How shares responded: Nike’s shares fell 4.3% to $113.37 in the extended trading session, following the release of quarterly results on Thursday. The stock has added around 6% over the past month.

What to watch: Investors will watch the release of inflation data and the company’s inventory levels.

The markets today

The British pound will be in focus today ahead of a basket of economic reports

Context: The GBP/USD forex pair declined on Thursday, after recording sharp losses in the previous session.

Details: On Wednesday, the GBP/USD forex pair declined 0.88% to record its biggest daily downturn since mid-May.

The sterling failed to rebound on Thursday, after its sharp downturn in the previous session, which marked its biggest daily decline in seven weeks. The British pound remained under pressure as markets assessed the impact of the Bank of England’s interest rate hike on the economy.

UK’s higher-than-expected inflation in May triggered further speculations of the BoE continuing to hike interest rates this year. Consumer prices rose by an annual rate of 8.7%, versus expectations of 8.4%.

Traders now expect UK’s central bank to hike its benchmark interest rate by 50 basis points at its August meeting. Markets also expect the Bank Rate, which is currently 5%, to be increased to as much as 6% by the end of the year.

The GBP/USD forex pair fell to 1.2612 on Thursday. London’s FTSE 100 declined by 0.38% to close at 7,471.69.

What are expectations: Traders await the release of economic data on GDP growth rate, current account, and business investment from the UK today. The British economy is expected to grow by 0.2% year-over-year in the first quarter, down from 0.6% in the prior period.

The current account deficit, which shrank to £2.5 billion in the fourth quarter, is projected to widen to £5.5 billion in the first quarter. Analysts expect business investment to rise by 0.7% in the first quarter, following a 0.2% contraction in the prior period.

Other Markets: US trading indices closed mostly higher on Thursday, with the Dow Jones index and S&P 500 up by 0.80% and 0.45%, respectively, and the Nasdaq 100 down by 0.16%.

The news shaping the markets

Wagner mercenary forces will no longer be part of Russia’s ongoing war in Ukraine after the group’s leader, Yevgeny Prigozhin, refused to sign contracts with the Kremlin. The news sent the safe-haven US dollar index slightly lower this morning.


China’s official NBS manufacturing PMI climbed to 49 in June, compared to May’s five-month low of 48.8, lending support to the CNY/USD forex pair.


Australia’s private sector credit rose by 0.4% in May, in-line with market expectations, which sent the AUD/USD pair higher in forex trading this morning.


Japan’s industrial production fell by 1.6% in May, compared to 0.7% growth in the previous month, which exerted pressure on the JPY/USD forex pair.


UK’s car production surged 27% year-over-year to 79,046 units in May. This being the fourth month of growth in a row sent the GBP/USD pair higher in forex trading this morning.

What else to watch today

Germany’s retail sales, import prices, unemployed persons, unemployment change and unemployment rate, South Africa’s money supply M3, private sector credit and balance of trade, France’s consumer price inflation, household spending and producer prices, Spain’s current account, Eurozone’s unemployment rate and consumer price inflation, Mexico’s foreign exchange reserves and unemployment rate, Brazil’s Government budget value and unemployment rate, India’s deposit growth, foreign exchange reserves, value of loans, external debt and infrastructure output, Canada’s GDP, US personal consumption expenditure prices, personal income, personal spending, Chicago business barometer, University of Michigan consumer sentiment and Baker Hughes crude oil rigs, Russia’s consumer confidence and money supply M2, China’s current account, Australia’s CoreLogic home value index, Saudi Arabia’s bank lending growth and money supply M3, as well as Argentina’s economic activity estimator.


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