Companies and Brands
Nike Comes Out on Top of Earnings, Sort Of
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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:
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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