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NIKE (NKE) to Report Q2 Earnings: Here's What's in the Cards
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NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2024 results on Dec 21. The leading sports apparel retailer is likely to have witnessed top-line growth in the fiscal second 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 bottom-line performance.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $13.4 billion, suggesting 0.8% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 84 cents per share, indicating a decline of 1.2% from the year-ago reported number. 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 27.03%. Its bottom line beat the consensus estimate by 27.1%, 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 second quarter. Gains from its Consumer Direct Acceleration strategy, and robust digital and DTC performances 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 a record digital performance in the to-be-reported quarter. Strength in the North America, EMEA and APLA regions, fueled by increasing traffic, higher conversion and growth in average order value, is 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, and 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 1.2% year over year to $12,872.7 million in the fiscal second quarter, driven by 2.2% growth in Direct-to-Consumer and a 0.5% rise in the Wholesale business.
On the last reported quarter’s earnings call, management predicted revenue growth to be up slightly from the prior year, owing to difficult comparisons from last year’s solid growth.
However, NKE has been witnessing a decline in the gross and operating margins due to rising costs, higher markdowns, increased freight and logistic costs, elevated input costs, and currency headwinds. Also, elevated SG&A expenses are concerning.
On the last reported quarter’s earnings call, the company predicted a 100-bps improvement in the gross margin for the second quarter of fiscal 2024, driven by gains in strategic pricing, improved markdowns and lower ocean freight rates. This is expected to have been partly offset by higher product input costs and 50 bps of negative impacts of adverse currency rates.
NIKE has been witnessing 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 second quarter, owing to elevated marketing and advertising investments. These investments are likely to have supported significant global sports moments and product launches, and investment in capabilities to transform NIKE's operating model for greater speed and effectiveness.
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 second-quarter fiscal 2024 SG&A expenses to increase in the mid to high-single digits, owing to increased demand creation investments.
We anticipate the gross margin to expand 100 bps to 43.9%. Meanwhile, our estimate for SG&A expenses of $4,362.5 million indicates a year-over-year rise of 5.8%. We expect demand-creation expenses to increase 8% year over year and operating overheads to rise 5% year over year in the fiscal second quarter.
Driven by the soft gross margin and higher SG&A expenses, our model suggests a 50-bps contraction in the operating margin to 11.4% in the fiscal second 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 -0.85% and a Zacks Rank #2.
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.
Deckers Outdoor (DECK - Free Report) has an Earnings ESP of +3.27% and currently sports a Zacks Rank of 1. The company is expected to register top and bottom-line growth when it reports second-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for DECK’s quarterly revenues is pegged at $1.41 billion, which suggests growth of 4.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for DECK’s quarterly earnings has moved up 0.6% in the past seven days to $10.93 per share. The consensus estimate for earnings suggests growth of 4.3% from the year-ago quarter’s reported figure. DECK has delivered an earnings surprise of 26.3%, on average, in the trailing four quarters.
Royal Caribbean Cruises (RCL - Free Report) has an Earnings ESP of +0.39% and currently flaunts a Zacks Rank #1. RCL is likely to register top and bottom-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.4 billion, suggesting 29.6% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Royal Caribbean’s fourth-quarter earnings is pegged at $1.11, implying an improvement of 199.1% from the year-ago quarter’s reported number. The consensus mark for fourth-quarter earnings has risen by a penny in the past 30 days. RCL has delivered a negative bottom-line surprise of 28.3%, on average, in the trailing four quarters.
Boyd Gaming (BYD - Free Report) currently has an Earnings ESP of +1.82% and a Zacks Rank #3. BYD is anticipated to register top and bottom-line declines when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $922.8 million, indicating a decline of 0.01% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boyd Gaming’s earnings is pegged at $1.44 per share, indicating a decline of 16.3% from the prior-year quarter’s reported number. The consensus estimate for earnings has been unchanged in the past 30 days. BYD delivered an earnings surprise of 6.9%, on average, in the trailing four quarters.
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NIKE (NKE) to Report Q2 Earnings: Here's What's in the Cards
NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2024 results on Dec 21. The leading sports apparel retailer is likely to have witnessed top-line growth in the fiscal second 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 bottom-line performance.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $13.4 billion, suggesting 0.8% growth from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 84 cents per share, indicating a decline of 1.2% from the year-ago reported number. 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 27.03%. Its bottom line beat the consensus estimate by 27.1%, 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 second quarter. Gains from its Consumer Direct Acceleration strategy, and robust digital and DTC performances 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 a record digital performance in the to-be-reported quarter. Strength in the North America, EMEA and APLA regions, fueled by increasing traffic, higher conversion and growth in average order value, is 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, and 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 1.2% year over year to $12,872.7 million in the fiscal second quarter, driven by 2.2% growth in Direct-to-Consumer and a 0.5% rise in the Wholesale business.
On the last reported quarter’s earnings call, management predicted revenue growth to be up slightly from the prior year, owing to difficult comparisons from last year’s solid growth.
However, NKE has been witnessing a decline in the gross and operating margins due to rising costs, higher markdowns, increased freight and logistic costs, elevated input costs, and currency headwinds. Also, elevated SG&A expenses are concerning.
On the last reported quarter’s earnings call, the company predicted a 100-bps improvement in the gross margin for the second quarter of fiscal 2024, driven by gains in strategic pricing, improved markdowns and lower ocean freight rates. This is expected to have been partly offset by higher product input costs and 50 bps of negative impacts of adverse currency rates.
NIKE has been witnessing 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 second quarter, owing to elevated marketing and advertising investments. These investments are likely to have supported significant global sports moments and product launches, and investment in capabilities to transform NIKE's operating model for greater speed and effectiveness.
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 second-quarter fiscal 2024 SG&A expenses to increase in the mid to high-single digits, owing to increased demand creation investments.
We anticipate the gross margin to expand 100 bps to 43.9%. Meanwhile, our estimate for SG&A expenses of $4,362.5 million indicates a year-over-year rise of 5.8%. We expect demand-creation expenses to increase 8% year over year and operating overheads to rise 5% year over year in the fiscal second quarter.
Driven by the soft gross margin and higher SG&A expenses, our model suggests a 50-bps contraction in the operating margin to 11.4% in the fiscal second 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 -0.85% and a Zacks Rank #2.
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.
Deckers Outdoor (DECK - Free Report) has an Earnings ESP of +3.27% and currently sports a Zacks Rank of 1. The company is expected to register top and bottom-line growth when it reports second-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for DECK’s quarterly revenues is pegged at $1.41 billion, which suggests growth of 4.5% 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 DECK’s quarterly earnings has moved up 0.6% in the past seven days to $10.93 per share. The consensus estimate for earnings suggests growth of 4.3% from the year-ago quarter’s reported figure. DECK has delivered an earnings surprise of 26.3%, on average, in the trailing four quarters.
Royal Caribbean Cruises (RCL - Free Report) has an Earnings ESP of +0.39% and currently flaunts a Zacks Rank #1. RCL is likely to register top and bottom-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.4 billion, suggesting 29.6% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Royal Caribbean’s fourth-quarter earnings is pegged at $1.11, implying an improvement of 199.1% from the year-ago quarter’s reported number. The consensus mark for fourth-quarter earnings has risen by a penny in the past 30 days. RCL has delivered a negative bottom-line surprise of 28.3%, on average, in the trailing four quarters.
Boyd Gaming (BYD - Free Report) currently has an Earnings ESP of +1.82% and a Zacks Rank #3. BYD is anticipated to register top and bottom-line declines when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $922.8 million, indicating a decline of 0.01% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boyd Gaming’s earnings is pegged at $1.44 per share, indicating a decline of 16.3% from the prior-year quarter’s reported number. The consensus estimate for earnings has been unchanged in the past 30 days. BYD delivered an earnings surprise of 6.9%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.