Nike Faces Excess Inventory

September 30, 2022

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Nike Faces Excess Inventory

Shares of Nike (NYSE: NKE) dropped 9.36% in after-hours trading on Thursday after the footwear and apparel giant posted mixed financial earnings results.

Financials: Nike reported earnings of 93 cents per share and revenue of $12.7 billion; both were better than expected.

Growth: The company experienced growth in North America and Europe. Losses in China were better than expected. Overall revenue grew by 4%.

Too Much Inventory: Gross margins dropped 202 basis points to 44.3%. Nike attributed this to higher freight and logistics costs, changes in foreign currency exchange rates, and too much inventory that the company had to liquidate in North America through markdowns.

Higher Costs: Nike’s selling and administrative expenses ballooned 10% to $3.9 billion.

Stock Price: Nike is down 42% this year and hit a 2022 low on Thursday.

Final Thoughts: The growth is good news for Nike, but the growth came through markdowns that resulted from excess inventory.

Notables

Notable Earnings Today: Carnival (NYSE: CL), CIRCOR International (NYSE: CIR).

Notable IPOs Today: Qomolangma Acquisition Corp. (Nasdaq: QUMOU).

Notable Equity Crowdfunding Campaigns Ending Today: Sky Quarry (Equifund), Arable Brewing Company (Republic), Geoji (StartEngine), Rize + Rest Cafe (Seed At The Table), Carbonic (Silicon Prairie), Taproom 120 (Honeycomb).

Notable Economic Events Today: Core PCE Price Index / PCE Price Index (8:30 a.m. ET),  Personal Spending (8:30 a.m. ET), Chicago PMI (9:45 a.m. ET), Michigan Consumer Expectations / Sentiment (10:00 a.m.).

Micron’s 50% Spending Cut

Photo by Vishnu Mohanan / Unsplash

Shares of Micron Technology (Nasdaq: MU) ticked up 0.12% in after-hours trading on Thursday after the semiconductor company posted mixed financial earnings results.

Financials: Micron reported earnings of $1.45 per share, which was better than expected. Its revenue of $6.64 billion was lower than expected.

Free Cash Flow: The company hit a record revenue of $30.8 billion for fiscal 2022, making it the sixth consecutive year of positive free cash flow for Micron.

Going Down: Revenue was way down from $8.64 billion in the prior quarter and from $8.27 billion in the same period last year.

Supply and Demand: The company blamed a weaker near-term supply-demand environment. Micron said it is enacting a 50% wafer fab equipment capital expenditures cut to try to fix this.

Stock Price: Micron’s stock is down 47% in 2022. Most semiconductor companies are experiencing similar pains.

Final Thoughts: Micron’s guidance was also lower than expected, suggesting a tough road ahead. But the lower stock price means that it is a better value for investors.

Equity Crowdfunding Spotlight: et Oliva

Briefly describe your business. et Oliva is a CPG startup that specializes in Mediterranean products. Currently, we carry two product lines and have really made headway in sales to other retailers. The problem we are solving is the lack of authentic Eastern Mediterranean Products.

What are the terms of the investment for your campaign? We are currently looking to raise $500k for manufacturing, slotting fees, salaries, and retail sales support. We are asking for a SAFE/Convertible note with a $4m cap and 80% discount (already council approved). There are also board seats available. See SMBX for details.

What makes your startup special? We have invested the time and resources in establishing strategic partnerships with distribution and supply chain, brokerage, and several others in the industry who can parse out very valuable information to avoid pitfalls.

Trends to Watch

Empire State Mandate: New York to mandate zero-emission vehicles in 2035 (The Hill)

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