(BFM Bourse) – The sports equipment manufacturer has published a turnover well above expectations for its second quarter. A slight improvement in stocks can also be observed.
Nike is ending 2022 on the right foot. The sports equipment manufacturer surprised the market by unveiling reassuring quarterly accounts, which gives momentum to its share price.
At the start of the session, the title of the American group won 14% on Wall Street. The company is trailing European rivals Adidas and Puma in its wake, rising 6.7% and 7.8% respectively, with Stifel seeing a positive cross-read for these two groups in Nike’s publication.
In the second quarter of its 2022-2023 financial year, which will end at the end of next May, the American group recorded revenues of 13.35 billion dollars, up 17% year-on-year, significantly more than the average estimate of $12.6 billion from analysts polled by Bloomberg. At constant exchange rates, sales jumped 27%.
Worries eased
“Quarterly sales exceeded Wall Street estimates, allaying investor concerns,” notes John Plassard of Mirabaud. With the exception of China, all of the group’s markets posted better-than-expected performance in terms of sales. Earnings per share, for its part, stood at 85 cents against an average forecast of 64 cents for analysts.
The gross margin of 42.9% was down 300 basis points (3 percentage points) but still exceeded expectations. This decline in gross profitability is explained in particular by actions, such as rebates, carried out to dispose of large inventories that have accumulated for Nike, as for its competitors, due to problems in the supply chain.
“If demand is holding up for the time being, stocks are increasing very sharply, particularly in the United States with problems of overcapacity in supply. This phenomenon is due to a sudden improvement in the supply chain”, explained Cédric Lecasble, analyst at Stifel, at the end of October, at BFM Bourse.
On this point, the group’s inventories are up 43% over one year to 9.3 billion dollars in the second quarter. However, the annual comparison is misleading.
A peak of past stocks
During its second quarter of 2021-2022 (over the period from September to November 2021, therefore) Nike, like all equipment manufacturers, faced abnormally low inventory levels, due to a supply chain that was turning idling, penalized by transport problems and health restrictions in Vietnam, recalls Bloomberg.
If we compare with the first quarter, where inventories stood at 9.7 billion dollars, a decline of 4% is observed.
Quoted by CNBC, Nike chief executive John Donahoe said the group had passed its “peak” in inventory accumulation.
“We saw Nike stand out with their signs of victory yesterday,” said AvaTrade’s Naeem Aslam, who puns the name Nike from the Greek “Nike”, the goddess of victory.
Regarding its outlook for its full fiscal year 2022-2023, Nike forecasts revenue growth of more than 10% at constant exchange rates and gross margin down year-on-year by 200 to 250 basis points. .
Julien Marion – ©2022 BFM Bourse
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