Nike Comes Out on Top of Earnings, Sort Of

Companies and Brands

Published: December 18, 2014 4:44 pm

Last Updated: April 28, 2020 2:44 am

Nike Inc. (NYSE: NKE) reported its second-quarter results Thursday after the market close as $0.74 in earnings per share and $7.4 billion in revenue, against Thomson Reuters consensus estimates of $0.70 in earnings per share and $7.15 billion in revenue. The second quarter from the previous year had $0.59 in earnings per share and $6.43 billion in revenue.

For the second quarter, gross margin increased to 45.1%, which was attributed primarily to a shift in mix to higher margin products. The effective tax rate for this quarter was 25.4%.

Inventories were up 11% to $4.2 billion from the same period in the previous year, and this was driven by a 9% increase in the Nike brand wholesale inventories.

Over the course of the second quarter, Nike repurchased a total of 5.1 million shares for approximately $425 million as part of its four-year $8 billion repurchase plan set by the board in 2012. As of the end of this quarter, 67.6 million shares have been repurchased under this program for $4.7 billion, and the average cost was $68.96 per share.

An important point to note in the earnings release was future orders:

As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel scheduled for delivery from December 2014 through April 2015 were 7% higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 11%.

Mark Parker, president and CEO, commented on the earnings:

Our strong second quarter results once again demonstrate NIKE is a growth company. The power of our portfolio continues to unlock growth, as we keep a laser focus on our biggest opportunities. The breadth and depth of that portfolio has helped us consistently deliver strong results — quarter after quarter, year after year.

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Some key analysts recently made calls on Nike:

Canaccord Genuity maintained a Hold rating and raised its price target to $94 from $88 on December 16.
Oppenheimer initiated coverage with an Outperform rating on December 16.
Cowen initiated coverage with an Outperform rating and a price target of $110 on December 15.
Deutsche Bank reiterated a Buy rating with a price target of $105 on December 15.

Shares of Nike closed Thursday up 2.7% at $97.08. Following the release of the earnings report, the initial response in the after-hours market was negative and shares were down over 2% at $94.70.

The stock has a consensus analyst price target of $101.64 and a 52-week trading range of $69.85 to $99.76. The market cap is about $83 billion.

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