Nike, How Did You Do It?

Nike (NKE) swooshed out and reported Q3 results. Revenues were up 16%. Cost of goods sold grew by only 14% and therefore margins are up 18%. Hey that’s pretty good. Commendable even when costs grow more slowly than the revenues shareholders win.

But wait a second. In the press release there was scant mention of this triumph. Also, no mention if this was sustainable into the near future. One passing sentence was attributable to revenues, reading, “Changes in currency exchange rates increased revenue growth by 6 percentage points for the quarter.” But, what about cost of goods sold, most of which is surely offshore and should also have a similar foreign exchange impact? Nary a word on that point. Hmmm...

The press release went on to discuss how they were growing and leveraging platforms. (Seems all retail and consumer goods companies have platforms but not product lines.) The press release was rather fluffy and did not satisfy an investor who likes to look at the why and how within the numbers. As a matter of fact, there was no real commentary about markets or any other numbers. Nike, you are tracking $20 billion in annual sales. You are a $33 billion market cap enterprise. Just saying your margin is up a little bit no longer satisfies. Does management understand the ramifications of a non-financially oriented earnings release?

Comments

[User 167124]

Look at the past 5 years performance folks, the metrics (Balance Sheets) are as compelling as any brand out there! Nike has been "Buy-Strong Buy" for a while now and Q-3 results in this type of market simply validates that. Travel to China/Asia and see what the "Hot" brand is!!!................N...