Nike Runs Past Inventory Woes

December 21, 2022

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Nike Runs Past Inventory Woes

Strong financial earnings results boosted shares of Nike (NYSE: NKE) by 12.69% in after-hours trading on Tuesday.

Financials: Nike reported earnings of 85 cents per share and revenue of $13.3 billion; both were better than expected.

Running to Growth: Overall revenues were up 17% year-over-year. Direct sales jumped 16%, wholesale revenues grew 19%, and Nike’s brand digital sales jumped 25%.

But Inventory: All of this success happened amid the backdrop of Nike’s previously reported problem of excess inventory. Inventories were up 43% year-over-year but were lower than the previous quarter.

Marginally Bad: Despite the growth, the gross margin dropped by 300 basis points to 42.9%. Nike said that this was due to higher markdowns in order to liquidate inventory (especially in North America). Foreign exchange rates and transportation costs were also challenges.

Stock Price: Shares of Nike are down 37% this year, but are about even in the last 30 days.

Final Thoughts: Nike made great progress fixing its inventory problem in the quarter, but more work has to be done.

Notables

Notable Earnings Today: Micron Technology (Nasdaq: MU), Carnival (NYSE: CCL), Rite Aid (NYSE: RAD), Quipt Home Medical (Nasdaq: QIPT), Toro (NYE: TTC), MillerKnoll (Nasdaq: MLKN), Cintas (Nasdaq: CTAS).

Notable IPOs Today: ECARX Holdings Inc. Class A Ordinary shares (Nasdaq: ECX), Huake Holding Biology Co., Ltd. Class A ordinary shares (Nasdaq: HUAK), Harrow Health, Inc. 11.875% Senior Notes due 2027 (Nasdaq: HROWM).

Notable Equity Crowdfunding Campaigns Ending Today: California Cowboy (StartEngine), IceGiant (StartEngine).

Notable Economic Events Today: Current Account Deficit (8:30 a.m. ET), CB Consumer Confidence (10:00 a.m. ET), Existing Home Sales (10:00 a.m. ET), Crude Oil Inventories (10:30 a.m. ET).

FedEx Cuts Costs And Grows

Photo by Bannon Morrissy / Unsplash

Despite mixed financial earnings results, shares of FedEx (NYSE: FDX) jumped 4.78% in after-hours trading on Tuesday.

Financials: FedEx reported earnings of $3.18 per share, which was better than expected. But the revenue only hit $22.8 billion, which was below estimates.

Express Mess: Operating income for FedEx Express dropped 64%. The company attributed this to lower global volumes.

Cutting Costs: FedEx began cost reduction initiatives in September and has since found an extra $1 billion in cost savings. The company now expects to cut costs by $3.7 billion in total.

Growth: Operating income for FedEx ground grew 24% and operating income for FedEx freight grew 32%.

Final Thoughts: With its stock down 36% this year, FedEx is aiming to cut costs and grow at the same time.

Workday Announces Sudden CEO Change

Shares of Workday (Nasdaq: WDAY) dipped 1.80% in after-hours trading on Tuesday after the software vendor announced that Chano Fernandez has stepped down as co-CEO and will be replaced by new co-CEO Carl Eschenbach.

Final Thoughts: The sudden news shocked investors. The stock is down 34% this year.

Trends to Watch

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