NIKE (NKE) Stock Loses Track: Will Strategies Aid Recovery?
Zacks Investment Research | Jan 16, 2018 07:27AM ET
NIKE Inc. (NYSE:NKE) stock seems to be jittery following a mixed second-quarter fiscal 2018. While the company seemed composed with revenues topping year over year and the Zacks Consensus Estimate, earnings dipped year over year. Further, the company’s pessimistic view for the third quarter and fiscal 2018 are probably the factors responsible for the stock’s doom.
Notably, shares of the swoosh brand owner declined 0.1% since reporting earnings results on Dec 21, 2017, against the Consumer Discretionary sector’s growth of 2.7%. Moreover, the company’s performance graph disappoints relative to the solid 24.4% growth witnessed in the past three months.
That said, let’s discuss in detail the core reasons for the stock’s dismal performance.
Nike’s Earnings Comparison Hurt by Soft Margins & Higher Costs
Though the athletic apparel, footwear and accessories retailer topped earnings estimates for the 22nd straight time in the fiscal second quarter, earnings lagged year over year primarily due to gross margin reduction and SG&A deleverage. Gross margin shriveled due to foreign currency headwinds and rise in product costs per unit. Moreover, higher SG&A expenses can be attributed to increase in operating overheads and demand creation expenses.
Nike, Inc. Price, Consensus and EPS Surprise
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