Nike Stock Slips As Lowered Guidance Outweighs Q2 Earnings Beat: Retail Mood Tanks

Nike shares fell 1.54% on Friday morning on disappointing guidance from the footwear giant even as it reported better-than-expected second-quarter earnings, dampening retail sentiment.

Nike’s earnings per share of $0.78 beat consensus estimates of $0.63 quoted by Wall Street. Its revenues stood at $12.35 billion, beating the estimated revenues of $12.11 billion, according to Stockwits data.

The company was on watch for assurances of a strong turnaround under its new president and CEO Elliot Hill, who highlighted the company’s return to sports and its athlete roots but warned of turnaround challenges that lie ahead.

Nike is now expecting a low-double digit percentage decline in its Q3 revenues, significantly higher than the 8% decline expected by analysts, Reuters reported. Its gross margins are expected to fall by 300-350 basis points.

Nike’s sales fell 8% in Q2 with gross margins registering a 100 basis points decline to 43.6%. 
On Stocktwits, the retail sentiment was leaning ‘extremely bearish’ on Friday morning.

But several retail investors were still hopeful.

Following the earnings report, Stifel has lowered its price target to $75 from $79 with a Hold rating, The Fly.com reported.

According to the firm, the Q2 upside was "overshadowed" by pressure seen on the second half of the fiscal year revenue, the report said, noting observations that a turnaround will carry "across many quarters."

Separately, a Stockwits poll asked retail investors about their views on key drivers behind the company’s next big move. About 52% of respondents chose the CEO’s strategic plan as the number one driver, followed by improving global sales, and consumer spending. 
 

Nike stock is down 21% year-to-date.

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