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The leading sports apparel retailer is likely to have witnessed sales and earnings declines in the quarter under review. The company has been seeing headwinds related to the ongoing supply-chain disruptions, and the closure of factories in Vietnam and Indonesia.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $11.23 billion, suggesting a 0.09% fall from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s earnings for the fiscal second quarter is pegged at 62 cents per share, suggesting a decline of 20.5% from the year-ago reported figure. Earnings estimates for the fiscal second quarter have been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 3.6%. Its bottom line beat the consensus estimate by 32.4%, on average, over the trailing four quarters.
The ongoing supply-chain challenges, and factory closures in Vietnam and Indonesia due to COVID-19 have been resulting in product shortages. While the digital and NIKE-owned businesses have been witnessing gains from strong demand and improved traffic, the Wholesale business has been impacted by the supply constraints. The company’s second-quarter fiscal 2022 revenues in the Wholesale segment are likely to have been impacted by the lower availability of inventory supplies, thanks to the worsening delays in transit.
On the last reported quarter’s earnings call, management noted that it remains uncertain regarding the global supply-chain disruptions, which have been challenging for manufacturers and have significantly hampered the mobility of products across the globe. The company noted that the transit times in North America and Europe further deteriorated in the fiscal first quarter due to port and rail congestions, and labor shortages. This is expected to have marred revenues in the to-be-reported quarter.
On the last reported quarter’s earnings call, although the company stated that Indonesia is fully operational, it expected the footwear factories in Vietnam to remain closed. It noted that the reopening and ramping up of the factories to full scale are likely to take time.
The company expects revenue growth of flat to down in the low-single digits, particularly in second-quarter fiscal 2022, owing to the impacts of the lost production due to factory closures and delayed delivery times for the holiday and spring seasons. It expects the lost weeks of production and the longer transit times to result in short-term inventory shortages in the market over the next few quarters. NKE expects all of its geographic regions to be impacted by the difficult dynamics.
However, some geographies in Asia, with less in-transit inventory at the end of the fiscal first quarter, are likely to have witnessed uneven impacts in the fiscal second quarter.
Management anticipated higher air freight rates to hurt the gross margin throughout fiscal 2022, reflecting impacts in the fiscal second quarter. The company estimated the gross margin to expand at a lower rate than fiscal 2022 expectation of 125 bps growth due to higher planned airfreight investments for the holiday season.
Nonetheless, NIKE has been benefiting from the return of traffic to stores as well as continued digital momentum. Its product innovation, brand strength and scale of operations have been driving digital sales growth. The NIKE Direct business has been benefiting from the steady normalization of the owned retail business and continued momentum in the digital business. Management expects the consumer demand trends to remain strong at all times, driven by its strong customer connections and brand momentum. This is likely to have aided the performance in the to-be-reported quarter.
NIKE’s efficient digital ecosystem, which comprises its online site as well as commercial and activity apps, has become the primary channel to engage and serve customers. This has been aiding digital sales growth for the past few quarters. Even as stores reopen, the company is likely to have witnessed strong digital trends in the fiscal second quarter, demonstrating the strength of its brands and investments made over the past several years to improve digital consumer experiences.
Zacks Model
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIKE has a Zacks Rank #3 but an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Callaway Golf currently has an Earnings ESP of +24.23% and a Zacks Rank of 2. The company is expected to register top and bottom-line growth when it reports fourth-quarter 2021 numbers. The Zacks Consensus Estimate for ELY’s quarterly revenues is pegged at $696.6 million, which suggests growth of 85.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Callaway’s quarterly loss was narrowed by a penny in the last seven days to 28 cents per share, suggesting 15.2% growth from the year-ago reported number. ELY has delivered an earnings beat of 1,022.9%, on average, in the trailing four quarters.
Deckers Outdoor (DECK - Free Report) currently has an Earnings ESP of +7.33% and a Zacks Rank #3. DECK is anticipated to register top-line growth when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.18 billion, indicating an improvement of 9.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Deckers’ bottom line of $8.25 per share has been unchanged in the past 30 days. However, the consensus estimate suggests a decline of 8.23% from $8.99 reported in the year-ago quarter. DECK has delivered an earnings beat of 1,126.5%, on average, in the trailing four quarters.
Carnival (CCL - Free Report) currently has an Earnings ESP of +3.50% and a Zacks Rank #3. CCL is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.48 billion, suggesting significant growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Carnival’s quarterly loss of $1.46 suggests 27.7% growth from a loss of $2.02 reported in the year-ago quarter. However, the consensus mark has widened in the past 30 days from a loss of $1.38 stated earlier.
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NIKE (NKE) Queued Up for Q2 Earnings: Can It Beat Estimates?
NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2022 results on Dec 20.
The leading sports apparel retailer is likely to have witnessed sales and earnings declines in the quarter under review. The company has been seeing headwinds related to the ongoing supply-chain disruptions, and the closure of factories in Vietnam and Indonesia.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $11.23 billion, suggesting a 0.09% fall from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s earnings for the fiscal second quarter is pegged at 62 cents per share, suggesting a decline of 20.5% from the year-ago reported figure. Earnings estimates for the fiscal second quarter have been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 3.6%. Its bottom line beat the consensus estimate by 32.4%, on average, over the trailing four quarters.
NIKE, Inc. Price and EPS Surprise
NIKE, Inc. price-eps-surprise | NIKE, Inc. Quote
Key Factors to Note
The ongoing supply-chain challenges, and factory closures in Vietnam and Indonesia due to COVID-19 have been resulting in product shortages. While the digital and NIKE-owned businesses have been witnessing gains from strong demand and improved traffic, the Wholesale business has been impacted by the supply constraints. The company’s second-quarter fiscal 2022 revenues in the Wholesale segment are likely to have been impacted by the lower availability of inventory supplies, thanks to the worsening delays in transit.
On the last reported quarter’s earnings call, management noted that it remains uncertain regarding the global supply-chain disruptions, which have been challenging for manufacturers and have significantly hampered the mobility of products across the globe. The company noted that the transit times in North America and Europe further deteriorated in the fiscal first quarter due to port and rail congestions, and labor shortages. This is expected to have marred revenues in the to-be-reported quarter.
On the last reported quarter’s earnings call, although the company stated that Indonesia is fully operational, it expected the footwear factories in Vietnam to remain closed. It noted that the reopening and ramping up of the factories to full scale are likely to take time.
The company expects revenue growth of flat to down in the low-single digits, particularly in second-quarter fiscal 2022, owing to the impacts of the lost production due to factory closures and delayed delivery times for the holiday and spring seasons. It expects the lost weeks of production and the longer transit times to result in short-term inventory shortages in the market over the next few quarters. NKE expects all of its geographic regions to be impacted by the difficult dynamics.
However, some geographies in Asia, with less in-transit inventory at the end of the fiscal first quarter, are likely to have witnessed uneven impacts in the fiscal second quarter.
Management anticipated higher air freight rates to hurt the gross margin throughout fiscal 2022, reflecting impacts in the fiscal second quarter. The company estimated the gross margin to expand at a lower rate than fiscal 2022 expectation of 125 bps growth due to higher planned airfreight investments for the holiday season.
Nonetheless, NIKE has been benefiting from the return of traffic to stores as well as continued digital momentum. Its product innovation, brand strength and scale of operations have been driving digital sales growth. The NIKE Direct business has been benefiting from the steady normalization of the owned retail business and continued momentum in the digital business. Management expects the consumer demand trends to remain strong at all times, driven by its strong customer connections and brand momentum. This is likely to have aided the performance in the to-be-reported quarter.
NIKE’s efficient digital ecosystem, which comprises its online site as well as commercial and activity apps, has become the primary channel to engage and serve customers. This has been aiding digital sales growth for the past few quarters. Even as stores reopen, the company is likely to have witnessed strong digital trends in the fiscal second quarter, demonstrating the strength of its brands and investments made over the past several years to improve digital consumer experiences.
Zacks Model
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIKE has a Zacks Rank #3 but an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Callaway Golf currently has an Earnings ESP of +24.23% and a Zacks Rank of 2. The company is expected to register top and bottom-line growth when it reports fourth-quarter 2021 numbers. The Zacks Consensus Estimate for ELY’s quarterly revenues is pegged at $696.6 million, which suggests growth of 85.9% from the prior-year quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Callaway’s quarterly loss was narrowed by a penny in the last seven days to 28 cents per share, suggesting 15.2% growth from the year-ago reported number. ELY has delivered an earnings beat of 1,022.9%, on average, in the trailing four quarters.
Deckers Outdoor (DECK - Free Report) currently has an Earnings ESP of +7.33% and a Zacks Rank #3. DECK is anticipated to register top-line growth when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.18 billion, indicating an improvement of 9.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Deckers’ bottom line of $8.25 per share has been unchanged in the past 30 days. However, the consensus estimate suggests a decline of 8.23% from $8.99 reported in the year-ago quarter. DECK has delivered an earnings beat of 1,126.5%, on average, in the trailing four quarters.
Carnival (CCL - Free Report) currently has an Earnings ESP of +3.50% and a Zacks Rank #3. CCL is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.48 billion, suggesting significant growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Carnival’s quarterly loss of $1.46 suggests 27.7% growth from a loss of $2.02 reported in the year-ago quarter. However, the consensus mark has widened in the past 30 days from a loss of $1.38 stated earlier.