Yesterday, Nike reported better than expected profit for the 3 months ended 31 August (the company's fiscal first quarter). However, it just missed on Wall Street's revenue expectations. EPS came in at 94 cents vs. 75 cents estimated, with revenue at $12.94 billion against a forecast of $12.98 billion.
Company gross margin was 44.2%, which was lower by about 10 bps (but higher than the analyst estimates of 43.7%) due to higher product costs and a tougher foreign currency environment. Nike mitigated some effect through "strategic pricing actions."
The market has celebrated that company inventories declined 10%, suggesting diminishing stores of unsold goods. Chief Financial Officer Matthew Friend said that Nike is "cautiously planning for modest markdown improvements for the balance of the year, given the promotional environment."
The company is reporting double-digit growth in China and maintained that they are gaining market share from rivals there.
It anticipates further improvement in its second quarter, expecting better revenue and gross margins.
Shares were up close to 8% in after-hours trade.
On a technical basis, Nike's weekly RSI is oversold (green rectangle). This suggests that there is scope for a rally as the indicator normalises.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.