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Here's How NIKE (NKE) is Positioned Just Before Q4 Earnings
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NIKE Inc. (NKE - Free Report) is slated to release fourth-quarter fiscal 2023 results on Jun 29. The leading sports apparel retailer is likely to have witnessed top-line growth in the fiscal fourth quarter, while its earnings per share are expected to have declined year over year.
The company has been gaining from its Consumer Direct Acceleration strategy, along with strong demand, compelling products, and robust performance in its digital and DTC businesses. Supply-chain constraints, continued weakness in Greater China and higher costs have been weighing on its performance.
The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $12.6 billion, suggesting 2.8% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at 67 cents per share, suggesting a decline of 25.6% from the year-ago reported number. Earnings estimates for the fiscal fourth quarter have moved up by a penny in the past seven days.
For fiscal 2023, the Zacks Consensus Estimate for revenues is pegged at $51 billion, suggesting 9.1% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings is pegged at $3.24 per share, suggesting a decline of 13.6% from the year-ago reported number. Earnings estimates for fiscal 2023 have been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 51.9%. Its bottom line beat the consensus estimate by 24%, on average, over the trailing four quarters.
NIKE is expected to have witnessed continued gains from brand strength, robust consumer demand and an innovative product pipeline in the fiscal fourth quarter. Gains from its Consumer Direct Acceleration strategy, and robust digital and DTC performance are expected to have been other tailwinds.
Continued strength in retail traffic trends within NIKE Direct has been boosting conversion rates. The strong member buying trends are likely to have led to record digital performance in the to-be-reported quarter. Strength in North America, EMEA and APLA regions, fueled by increasing traffic, higher conversion and growth in average order value, are likely to have aided sales in the to-be-reported quarter.
The NIKE Direct business has been benefiting from robust growth across regions and an efficient digital ecosystem, which comprises its online site, as well as commercial and activity apps. Revenues at NIKE-owned stores are expected to have gained from improved traffic, higher conversion rates and growth in average order value. The NIKE Direct business is likely to have benefited from growth in North America, EMEA and APLA, offset by continued weakness in Greater China in the to-be-reported quarter.
We expect total NIKE Brand revenues to increase 1.8% year over year to $11,866.3 million in the fiscal fourth quarter. The increase is likely to be driven by a 1.2% growth in Direct-to-Consumer and a 2.7% rise in the Wholesale business.
On the last reported quarter’s earnings call, management predicted flat to low-single-digit revenue growth for the fiscal fourth quarter. For fiscal 2023, it expects revenues to grow in high-single digits.
However, NKE has been witnessing a decline in gross and operating margins due to rising costs, higher markdowns, increased freight and logistics costs, elevated input costs and currency headwinds. Also, elevated SG&A expenses are concerning.
On the last reported quarter’s earnings call, management provided a bleak view for fiscal 2023, driven by expectations of ongoing and accelerated actions to reduce inventory by year-end, higher freight and logistics expenses, and 100 basis points of foreign exchange headwinds. For fiscal 2023, management predicted gross margin to contract 250 basis points, at the low end of its earlier mentioned range.
NIKE has been reporting elevated SG&A expenses, driven by increased demand creation expenses due to the normalization of sporting activities and overhead costs related to higher wages. Demand-creation expenses are likely to have increased in the fiscal fourth quarter, owing to elevated marketing and advertising investments. Operating overhead expenses are expected to have resulted from higher wage-related expenses and NIKE Direct costs, as well as increased technology investments to support digital transformation in the to-be-reported quarter.
On the last reported quarter’s earnings call, management expected fiscal 2023 SG&A expenses to increase 10% year over year.
We anticipate gross margin to decline 150 bps to 43.5%. Meanwhile, our estimate for SG&A expense of $4,321.1 million indicates a rise of 7.1% year over year. Driven by the soft gross margin and higher SG&A expense, our model suggests a 320-bps contraction in operating margin to 8.8% in the fiscal fourth quarter.
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 an Earnings ESP of -1.50% and a Zacks Rank #3.
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.
Whirlpool (WHR - Free Report) currently has an Earnings ESP of +4.57% and a Zacks Rank of 3. The company is expected to register top and bottom-line declines when it reports second-quarter 2023 numbers. The Zacks Consensus Estimate for WHR’s quarterly revenues is pegged at $4.8 billion, which suggests a decline of 5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Whirlpool’s quarterly earnings has declined 6% in the past 30 days to $3.94 per share. The consensus earnings estimate suggests a decline of 34% from the year-ago quarter’s figure. WHR has delivered an earnings surprise of 8.1%, on average, in the trailing four quarters.
Carnival Corp (CCL - Free Report) currently has an Earnings ESP of +3.82% and a Zacks Rank #3. CCL is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $4.8 billion, suggesting 99.5% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Carnival’s fiscal second quarter is pegged at a loss of 35 cents, suggesting an improvement of 78.7% from the year-ago quarter’s reported number. However, the consensus mark for the fiscal second quarter has widened by a penny in the past 30 days. CCL has delivered a negative bottom-line surprise of 102.9%, on average, in the trailing four quarters.
Boyd Gaming (BYD - Free Report) currently has an Earnings ESP of +3.55% and a Zacks Rank #3. BYD is anticipated to register bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $890.5 million, indicating a decline of 0.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boyd Gaming’s earnings is pegged at $1.56 per share, suggesting growth of 5.4% from the prior-year quarter. The consensus estimate for earnings has moved down by a penny in the past seven days. BYD delivered an earnings beat of 13.7%, on average, in the trailing four quarters.
Image: Bigstock
Here's How NIKE (NKE) is Positioned Just Before Q4 Earnings
NIKE Inc. (NKE - Free Report) is slated to release fourth-quarter fiscal 2023 results on Jun 29. The leading sports apparel retailer is likely to have witnessed top-line growth in the fiscal fourth quarter, while its earnings per share are expected to have declined year over year.
The company has been gaining from its Consumer Direct Acceleration strategy, along with strong demand, compelling products, and robust performance in its digital and DTC businesses. Supply-chain constraints, continued weakness in Greater China and higher costs have been weighing on its performance.
The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $12.6 billion, suggesting 2.8% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at 67 cents per share, suggesting a decline of 25.6% from the year-ago reported number. Earnings estimates for the fiscal fourth quarter have moved up by a penny in the past seven days.
For fiscal 2023, the Zacks Consensus Estimate for revenues is pegged at $51 billion, suggesting 9.1% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings is pegged at $3.24 per share, suggesting a decline of 13.6% from the year-ago reported number. Earnings estimates for fiscal 2023 have been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 51.9%. Its bottom line beat the consensus estimate by 24%, 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
NIKE is expected to have witnessed continued gains from brand strength, robust consumer demand and an innovative product pipeline in the fiscal fourth quarter. Gains from its Consumer Direct Acceleration strategy, and robust digital and DTC performance are expected to have been other tailwinds.
Continued strength in retail traffic trends within NIKE Direct has been boosting conversion rates. The strong member buying trends are likely to have led to record digital performance in the to-be-reported quarter. Strength in North America, EMEA and APLA regions, fueled by increasing traffic, higher conversion and growth in average order value, are likely to have aided sales in the to-be-reported quarter.
The NIKE Direct business has been benefiting from robust growth across regions and an efficient digital ecosystem, which comprises its online site, as well as commercial and activity apps. Revenues at NIKE-owned stores are expected to have gained from improved traffic, higher conversion rates and growth in average order value. The NIKE Direct business is likely to have benefited from growth in North America, EMEA and APLA, offset by continued weakness in Greater China in the to-be-reported quarter.
We expect total NIKE Brand revenues to increase 1.8% year over year to $11,866.3 million in the fiscal fourth quarter. The increase is likely to be driven by a 1.2% growth in Direct-to-Consumer and a 2.7% rise in the Wholesale business.
On the last reported quarter’s earnings call, management predicted flat to low-single-digit revenue growth for the fiscal fourth quarter. For fiscal 2023, it expects revenues to grow in high-single digits.
However, NKE has been witnessing a decline in gross and operating margins due to rising costs, higher markdowns, increased freight and logistics costs, elevated input costs and currency headwinds. Also, elevated SG&A expenses are concerning.
On the last reported quarter’s earnings call, management provided a bleak view for fiscal 2023, driven by expectations of ongoing and accelerated actions to reduce inventory by year-end, higher freight and logistics expenses, and 100 basis points of foreign exchange headwinds. For fiscal 2023, management predicted gross margin to contract 250 basis points, at the low end of its earlier mentioned range.
NIKE has been reporting elevated SG&A expenses, driven by increased demand creation expenses due to the normalization of sporting activities and overhead costs related to higher wages. Demand-creation expenses are likely to have increased in the fiscal fourth quarter, owing to elevated marketing and advertising investments. Operating overhead expenses are expected to have resulted from higher wage-related expenses and NIKE Direct costs, as well as increased technology investments to support digital transformation in the to-be-reported quarter.
On the last reported quarter’s earnings call, management expected fiscal 2023 SG&A expenses to increase 10% year over year.
We anticipate gross margin to decline 150 bps to 43.5%. Meanwhile, our estimate for SG&A expense of $4,321.1 million indicates a rise of 7.1% year over year. Driven by the soft gross margin and higher SG&A expense, our model suggests a 320-bps contraction in operating margin to 8.8% in the fiscal fourth quarter.
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 an Earnings ESP of -1.50% and a Zacks Rank #3.
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.
Whirlpool (WHR - Free Report) currently has an Earnings ESP of +4.57% and a Zacks Rank of 3. The company is expected to register top and bottom-line declines when it reports second-quarter 2023 numbers. The Zacks Consensus Estimate for WHR’s quarterly revenues is pegged at $4.8 billion, which suggests a decline of 5% 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 Whirlpool’s quarterly earnings has declined 6% in the past 30 days to $3.94 per share. The consensus earnings estimate suggests a decline of 34% from the year-ago quarter’s figure. WHR has delivered an earnings surprise of 8.1%, on average, in the trailing four quarters.
Carnival Corp (CCL - Free Report) currently has an Earnings ESP of +3.82% and a Zacks Rank #3. CCL is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $4.8 billion, suggesting 99.5% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Carnival’s fiscal second quarter is pegged at a loss of 35 cents, suggesting an improvement of 78.7% from the year-ago quarter’s reported number. However, the consensus mark for the fiscal second quarter has widened by a penny in the past 30 days. CCL has delivered a negative bottom-line surprise of 102.9%, on average, in the trailing four quarters.
Boyd Gaming (BYD - Free Report) currently has an Earnings ESP of +3.55% and a Zacks Rank #3. BYD is anticipated to register bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $890.5 million, indicating a decline of 0.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boyd Gaming’s earnings is pegged at $1.56 per share, suggesting growth of 5.4% from the prior-year quarter. The consensus estimate for earnings has moved down by a penny in the past seven days. BYD delivered an earnings beat of 13.7%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.