At this equities report we will focus at yesterday’s aftermarket hours, Nike unveiled its latest quarterly report and the mixed results ultimately disappointed investors, since the sports apparel giant failed to hit its revenue targets, but nonetheless managed to surpass its EPS goals. In this report we aim to present and analyse briefly Nike’s earnings report, assess the potential impact and conclude with a technical analysis.
Equities report
Drill down on the data
Narrowing our focus on the data posted, Nike beat its Earnings per share target this past quarter as it earned a profit of $0.70 per share, $0.18 higher than what analysts anticipated, but missed its Revenue target by $50 million ($11.59B actual vs $11.64B expectation). $NKE is down almost 18% year to date, reflecting the abstinence of investors at allocating funds into the athletics apparel company, staying uninspired by its performance, and post yesterday’s mixed data, its share price fell by more than 6% in the aftermarket hours.
Lower than expected sales but also noticeable declines in online traffic across Nike Direct were also largely more significant than anticipated. Both Nike Digital and Nike Direct franchises were down by almost 50% compared to the prior year, a result that prompted a product rebalancing allocation towards the company’s strong-suited channels to counter the negative effects. The most worrisome aspect of the report, from investors point of view however, was indeed the drop of both footwear and apparel sales by -11% and -10% respectively (yearly basis), with revenue stemming from footwear hitting its lowest reading in a dozen of quarters, casting doubts on the leader of Footwear industry.
Executive command shakeup
Besides the revenue miss equities, the withdrawal of its full year guidance for 2025 unnerved investors, as forecasters are now left with no forward-looking data to update their models’ targets. In addition, the company has postponed its Investor Day event until further notice, as Elliot Hill, will be inaugurated on as the new CEO the 14th of October, taking over the initiative from John Donahoe, after 4 uneventful years at the helm.
The board and executive team recognized the fact that growth is currently in a slump and that restructuring efforts are underway but noted that a “comeback at this scale takes time” and even though there are positive signals regarding the trajectory, that the company has “yet to turn the corner”.
The China factor
Moreover, partner stores across China were particularly weak, however recent developments from local authorities give rise to hopes that the situation will stabilize and even outpace future expectations. The strategic geolocational diversification practices and the global reach of Nike however, have the possibility of placing the company in an advantageous position to capture a larger share of the Chinese market, which serves as a hopeful bet in the eyes of investors.
In and of itself, the sheer size of the world’s second largest economy could bring in, immense benefits and counter the stagnating demand and sales from North America, yet more solid and substantial progress must be made by the Chinese authorities to revitalize the downbeat domestic demand trend of the Red Giant.
Equities Análisis técnico
SP500 Daily Chart
- Support: 85.00 (S1), 78.00 (S2), 71.00 (S3)
- Resistance: 91.00 (R1), 97.50 (R2), 105.00 (R3)
Looking at NIKE’s Daily chart we observe the company heading north, bound within an ascending channel incepted since the start of August, recovering almost all of its losses since the announcement of its past quarter report in July.
We hold a bullish outlook bias for the stock, give the higher lows and higher highs, however after yesterday’s mixed earnings call data we are also inclined to take into account the possibility of a short-medium sideways motion at this point, depending ultimately on the reaction of speculators today.
Nevertheless, the consolidation and the maintenance of the price action above both the 12 and 26 EMAs (at least in premarket) and their slopes pointing upwards, alongside the formation of a renewed bullish crossover, validates our call. Moreover, the crossing of the Signal line above the MACD line and the histogram maintaining a positive value, adds more confidence, but also the fact that the ADX registers a value of 30, signifies the decent bullish momentum that drove the for the stock higher (+DI 36 vs -DI 15).
Should the bulls continue to reign, we may see NKE breaking definitively past the 91.00 (R1) resistance ceiling and head for the 97.50 (R2) three-month high resistance barrier.
Should on the other hand, selling pressure aggravate and the bears gain control, we may see the break below closest temporary support (S1) at $85.00, a potential break below the lower bound of the ascending channel and/or the test of the $78.00 (S2) support base.
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