Nike Stock News: NKE sinks on slight EPS miss despite healthy sales

Nike (NKE) reported mixed fiscal fourth-quarter earnings late Thursday that sent the stock into a moderate decline. The NKE stock price gave up 3.6% and is trading at $109.35 in Friday’s premarket. Nike missed Wall Street consensus for adjusted earnings as margins slipped, but revenue topped expectations by $240 million.

At the time of writing, S&P 500 futures are ahead 0.1%, and NASDAQ 100 futures gain 0.3%. This demonstrates that the market is tilted toward growth stocks early on Friday.

Nike stock news: Forex headwinds, higher COGS, growing transport costs trim margin

Nike reported adjusted earnings per share (EPS) of $0.66 in the quarter ending in May, missing consensus by a penny. Management said adverse forex valuations led to the shortfall, but it listed a number of other difficulties as well.

Higher logistics and transportation costs also pushed the year-ago gross margin of 45% down to 43.6%. Additionally, Nike experienced increased input costs but could not make up for it with higher prices. Instead, to move inventory, the purveyor of the Swoosh increased its markdowns.

Revenue of $12.83 billion was still well ahead of the forecast for $12.59 billion, but the fact that the athletic brand had to mark down a lot of products to reach that figure seems to have rubbed investors the wrong way.

Revenue of $1.81 billion in China was much better than the $1.64 billion that analysts had expected. That country’s surplus, however, was counteracted by slower growth that ranged from 3% to 5% YoY in the rest of the world. 

“Nike inventory dollars are flat versus the prior year, with units down double-digits across both footwear and apparel,” said CFO Matthew Friend. “Apparel units are down more than 20% versus the prior year. Our mix of in-transit inventory has normalized, and days in inventory show improvement versus the prior quarter and the prior year.”

Nike stock forecast

Nike stock is slouching back to the 21-day Simple Moving Average near $109. A break here would send Nike down to the $102 to $104 support range that tracked well last November and December and once again in early June. Nike stock does not appear to be in any sort of rally, although the Moving Average Convergence Divergence (MACD) indicator is moving in an upward direction. NKE stock needs to break through the $114 to $118.50 resistance zone to spark a renewed rally in the share price.

NKE daily chart