Nike in fiscal 3Q16: Revenue and earnings guidance

Based on guidance provided by Andy Campion, chief financial officer of Nike (NKE), the company expects fiscal 3Q16 sales to grow by high single digits to low double digits on a reported basis, and by digits in the mid-teens on a currency-neutral basis. As explained earlier in this series, Nike’s exposure to overseas markets is expected to weigh down on its reported sales, particularly in Europe, Japan, and emerging markets.

However, for fiscal 2016, Nike has kept its revenue projections unchanged from what was provided with its fiscal 1Q16 results release. The company expects its top line to grow by mid-single digits.

Just How Bullish is Nike’s Guidance for Fiscal 3Q16?

Peer group guidance

  • Under Armour (UA) expects sales to grow ~25% to $5.0 billion in 2016.
  • Adidas (ADDYY) expects 2016 sales to grow between 10% and 12%.
  • Lululemon Athletica (LULU) has raised its full-year fiscal 2016 guidance for both sales and earnings per share. It now expects sales to come in between $2.045 billion and $2.05 billion in fiscal 2016, up from the $2.025 billion–$2.04 billion range projected earlier. A better-than-expected holiday selling season in 2015 was responsible for the upwardly raised guidance.
  • VF Corporation (VFC) expects sales to grow at a mid-single-digit rate in 2016.
  • Columbia Sportswear (COLM) expects sales to grow at a mid-single-digit rate in 2016, after factoring in a negative impact of one percentage point from adverse currency exchange movements

Wall Street expectations

Wall Street analysts have projected a fiscal 3Q16 revenue of $8.2 billion for Nike, a 9.8% increase year-over-year. Adjusted earnings per share are projected to rise 9.7% to ~$0.49 in the quarter. Nike makes up 1.3% of the portfolio holdings in the PowerShares S&P 500 High Quality ETF (SPHQ).

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