NIKE, Inc. (NYSE: NKE), a maker of athletic footwear, apparel, accessories and equipment, reported positive results in the fourth quarter of fiscal 2022 (ended May 31). The company exceeded profit and revenue expectations, which was indicated by TipRanks website visits tool.
Strong performance from Nike’s direct-to-consumer business led to strong fourth quarter results.
Despite the pace, the company’s shares were down 2.89% in Monday’s extended trading session on the company’s bleak outlook.
The revenue results were evident on TipRanks’ new tool that measures visits to Nike’s website. Pre-earnings, we were able to see information about Nike’s performance in the fiscal fourth quarter.
An upward trend in website traffic was visible according to the tool. In the fourth quarter of fiscal 2022, the total number of visits to Nike websites showed an upward trend globally, representing a jump of 26.59% from the third quarter and an increase of 7.14% year over year. This, in turn, indicated that the company could report upbeat fourth-quarter results.
Predictions based on website visits data from TipRanks proved correct, with Nike reporting better-than-expected results in the fourth quarter of fiscal 2022.
Results in detail
Nike reported fourth-quarter earnings of $0.90 per share, beating the consensus estimate of $0.81. The company reported earnings of $0.93 per share in the year-ago quarter.
Revenue was $12.2 billion, down 1% year-over-year. However, it exceeded analysts’ expectations of $12.1 billion. Revenues from the Nike brand and Converse were down 1%, although they were up 3% on a currency-neutral basis.
NIKE Direct revenue was $4.8 billion, up 7% year over year. Meanwhile, wholesale revenue fell 7% to $6.8 billion.
On a regional basis, North America revenue was down 5% year-over-year, while EMEA revenue jumped 9%. Additionally, revenue in Asia Pacific and Latin America jumped 15%. However, Greater China sales fell 19%.
Gross margin declined 80 basis points year over year to 45% due to high input and transportation expenses.
As of May 31, 2022, Nike had inventory of $8.4 billion, up 23% year over year. Meanwhile, cash and cash equivalents and short-term investments were $13 billion.
In fiscal 2022, Nike repurchased 27.3 million shares valued at $4 billion and paid dividends worth $1.8 billion to common shareholders.
In June 2022, Nike’s board of directors authorized a new four-year share buyback program worth $18 billion to repurchase Nike’s Class B common stock. The existing $15 billion share buyback program, which was scheduled to be completed in fiscal 2023, is being replaced by the new program.
In response to the published results, Nike CEO John Donahoe said, “NIKE’s results for this fiscal year demonstrate the unparalleled strength of our brands and our deep connection to consumers. Our competitive advantages, including our innovative product pipeline and expanding digital leadership, prove our strategy is working as we create value through our relentless drive to serve the future of sport.
Encouragingly, Nike Chief Financial Officer Matthew Friend said: “As we move forward, we will remain focused on what we can control and continue to manage the business for the long term. This includes leveraging our size and financial strength, optimizing supply and demand and, most importantly, creating value for our consumers, from the products we design, to the stories we tell, to the experiences we offer.
Management expects fiscal 2023 revenue to grow in the low double digits on a currency-neutral basis, partially offset by unfavorable currency movements of approximately 400 basis points.
In the first quarter of fiscal 2023, revenue growth is expected to be flat or slightly up year-over-year.
The Taking of Wall Street
The Street is cautiously bullish on the stock, with a Moderate Buy consensus rating based on 15 buys and seven holds. The average Nike price target of $142.05 implies an upside potential of 28.55%. The shares have lost 26.88% over the past year.
Additionally, Nike scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
TipRanks’ Hedge Fund Trading Activity Tool shows that sentiment in Nike is currently positive, as the cumulative change in holdings in the 35 hedge funds that were active over the past quarter was an increase of 537,000 shares. .
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Following COVID-related issues in China and continued unfavorable currency movements, as well as supply chain issues, Nike provided a weak outlook. Nevertheless, the digital transformation has greatly helped the company’s sales and shows long-term growth prospects. As a result, based on decent analyst ratings and the positive sentiment signal from hedge funds, investors might view the current level as a promising buying opportunity.
Additionally, being vigilant about website trends shown by TipRanks website traffic tool could help investors make sound investment decisions.
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