Nike Q1 Results Unlikely to Miss Guidance by Much, RBC Says

MT Newswires Live
Sep 29

Nike's (NKE) Q1 results are unlikely to miss guidance by much, with investor focus likely to shift to Q2 guidance and whether new CFO David Denton resets earnings expectations ahead of the Nov. 16-17 capital markets day, RBC Capital Markets said in a note Tuesday.

The company is scheduled to report fiscal Q1 results Thursday after market close. RBC expects revenue of $11.2 billion and diluted earnings of $0.43 per share.

Nike's recovery could take longer than expected as weak direct-to-consumer sales, China inventory pressure and soft sell-through continue, although gross margin should improve and Nike's inventory levels should fall.

RBC expects North America to perform better than Europe and Greater China, where sales are expected to fall 15%. It expects Q2 guidance to call for a low- to mid-single-digit revenue decline, an 80-basis-point improvement in gross margin and a 3% drop in selling and administrative costs.

The investment firm expects Nike to keep reducing inventory, but said excess products in the wider market, especially lifestyle footwear, will likely require more discounting and clearing in the coming months.

RBC reduced its price target to $40 from $45, with a sector perform rating.

Price: 35.99, Change: -0.41, Percent Change: -1.11

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