Earnings Preview: Nike

Jun.27.12 | About: Nike Inc. (NKE)

Nike (NYSE:NKE) is expected to report Q4 earnings after the market close on Thursday, June 28 with a conference call scheduled for 5:00 pm ET.


Analysts are looking for EPS of $1.37 on revenue of $6.52B. The consensus range is $1.24-$1.43 for EPS and $6.39B-$6.6B for revenue, according to First Call. In March, Nike forecast Q4 sales growth in the low double digits and gross margin down 100 basis points. The company reiterated FY12 sales growth in the mid-teens, consensus $24.11B, and guided FY13 revenue growth at or slightly above the high-single digit target range, consensus $26.31B. During the quarter, Nike announced plans to divest its Cole Haan and Umbro brands to sharpen its focus on driving growth in the NIKE, Jordan, Converse and Hurley brands. The company believes the divestitures will be complete by the end of its FY13. Reuters said potential acquirers for Cole Haan could include Wolverine Worldwide (NYSE:WWW), VF Corp. (NYSE:VFC) and LVMH (OTCPK:LVMUY), while E-Land and Fila could be interested in Umbro.

Analyst Views

Nike's plans to sell off the brands are seen as a positive, according to Janney Montgomery Scott analyst Eric Tracy, Barron's reported. He believes that Nike, along with other consumer brands with European exposure, should benefit from the upcoming London Olympics and the Euro Cup soccer tournament in Poland and the Ukraine. Canaccord, which has a Hold rating on the stock, expects lack of robust revenue growth, futures growth to decelerate, and lack of improvement in inventories. Earlier this month, Nike was upgraded to Hold from Sell at McAdams Wright and mentioned cautiously at OTR Global Research. In the year-ago quarter, Nike reported EPS of $1.24 on revenue of $5.8B.