Evaluating Nike’s top line in 1H17

Nike, the largest sportswear manufacturer in the world, clocked total sales of $17.2 billion in 1H17. Sales rose 7.1% YoY (year-over-year), beating the consensus in both the quarters.

Nike’s Top-Line Growth Likely to Slow Down in 3Q17

Overseas markets drive growth

Growth was driven by strength in the overseas market, which grew by double digits. Nike derives around 55% of its sales from international markets. Its exposure is higher than that of competitors Under Armour (UAA), PVH (PVH), and Ralph Lauren (RL), which derive around 15%, 45%, and 34% of sales from foreign markets, respectively.

As a result, the company’s top line has remained somewhat shielded from the ongoing headwinds in the US apparel segment like retail bankruptcies and channel dislocation over the past one year.

Under Armour, on the other hand, delivered unimpressive 4Q results in January. The company blamed the US retail landscape for missing top and bottom line consensus forecasts. To learn about the performance of Nike in various geographies, read the next segment.

Currency headwinds and the way forward

While dependence on foreign markets has been mostly positive for Nike, it has also resulted in currency headwinds, tapering the company’s top line during the current fiscal year. In fact, currency headwinds shaved off nearly a fourth of the company’s growth in the first half of 2017.

The management anticipates currency to continue impacting sales for the remainder of the year. It has forecasted fiscal 2017 top-line growth to lie in the high-single-digit to low-double-digit levels on a currency-neutral basis. However, after including the currency impact, sales are likely to expand at a high-single-digit rate.

Third quarter sales are likely to grow in the mid-single-digit range. Wall Street expects a 5.4% YoY increase in its 3Q17 top line to $8.5 billion, which is lower than what the company achieved in the first half of the year.

ETF investors seeking to add exposure to NKE can consider the ProShares Ultra Consumer Goods ETF (UGE), which invests 2.4% of its portfolio in NKE.

Latest articles

20 Jun

Will Refiners’ Earnings Plunge in 2019?

WRITTEN BY Maitali Ramkumar

Wall Street analysts expect refining firms' earnings to fall in 2019. Delek US Holdings (DK) and Valero Energy’s (VLO) earnings are estimated to fall less than 10% in 2019. However, the EPS of Marathon Petroleum (MPC), HollyFrontier (HFC), and Phillips 66 (PSX) are expected to fall 20%–40% this year.

After remaining tepid for the first four months of the year, gold prices have taken off in a big way. The initial impetus was provided by a tweet made by President Donald Trump on May 5, which revived trade tensions in a big way.

20 Jun

How Are Charter’s Revenues Trending in 2019?

WRITTEN BY Ambrish Shah

In the first quarter, Charter Communications (CHTR) reported total revenues of $11.2 billion—a rise of 5.2% year-over-year and $7 million ahead of the consensus estimate.

This morning before the market opened, Tesla (TSLA) was trading on a negative note despite a sharp rise in index futures. As of 9:10 AM ET, Tesla stock had fallen 1.2% in the pre-market session to $234.74 after Goldman Sachs cut the target price on the company by about 21%.

The US-China trade war has already given a scare to Apple’s (AAPL) investors vis-à-vis the possibility of a 25% tariff on Apple goods being imported from its Chinese facilities. As a result, Apple might be considering shifting its plants out of China.

Yesterday, Greenlane Holdings (GNLN) fell a whopping 17.1%. The stock has now fallen 28% this month, and it hit its all-time low yesterday. Greenlane Holdings listed in April and priced its IPO at $17 per share. However, since the stock surged more than 25% after its listing, it has been a sorry story for Greenlane Holdings investors.

172.31.38.64