Earnings Play:
NIKE, Inc. (NIKE), is engaged in design, development and marketing of footwear, apparel, equipment and accessory products. NIKE is a seller of athletic footwear and athletic apparel in the world.
Optionable
Would not hold on Earnings Release Date.
3rd Qtr Ending February 2012 – Release Date 3/22/2012 @ 4:15PM ET
Street value $1.21 vs $1.16.
Looking for a Beat of $0.05 or In-line EPS
Production Line: Nike (NKE) unveils several new high-end products, with the goal of showcasing them at the 2012 Summer Olympics. Perhaps the most important of the bunch is Nike's Flyknit running shoe. The result of 4 years of R&D work and proprietary manufacturing processes, Nike boasts the Flyknit offers the fit and comfort of a sock, while maintaining the structure and durability of a shoe. Nike's (NKE) new Flyknit shoes will prove good for runners and maybe great for investors, analysts say. Nike is using "micro-level precision engineering," where changes can be made nearly on the fly to account for new demands, and the process is so efficient NKE might be able to move production out of Asia and eventually make customized shoes per individual specifications.
The newest Nike (NKE) "monster" innovation: the Nike+ Fuelband, a wristband meant to monitor your movements; the user inputs the information on the web, and the bracelet lets him know when he hits fitness goals for each day. Some analyst thinks it's seen as a game-changer, calling the device the "iPod of fitness.". The firm's Nike+ FuelBand is a wristband that tracks everyday movements and provides metrics fort users to sync to smartphone devices or view online A new product aimed at motivating users to stay more active.
The arrival of Nike's new Air Jordan 11 Retro Concords creates massive lines in stores across the county, as well as some unfortunate breakouts of violence over the iconic sneakers priced at $180. Industry analysts estimate 300K-500K pairs have been produced by Nike in a campaign light on marketing.
Prior Earnings Release: FQ2 EPS of $1.00 beats by $0.03. Revenue of $5.73B (+18% Y/Y) beats by $100M. Shares +0.8% AH. Charles Denson says in an earnings CC that the running craze of the 1970s - to which the company can trace its ascent to a publicly trading company from a regional shoe seller - is back in full force. "We haven't seen this much energy around Running since the first boom happened back in the '70s. We were in the middle of that one, and we're in the middle of this one as well. Our results prove it, with Running up strong double digits again in Q2."
Analysts Comments: Analysts are jumping on the bandwagon with the notion that the Nike+ Fuelband could be a serious revenue driver for the company. D.A. Davidson starts coverage with a Buy, on a belief its track record and growth potential justify a premium valuation. Citigroup says it anticipates more upside despite the stock's recent rally, and raises its price target to $123 from $115. Citi notes the sports apparel giant could report futures up 16% - 17% on March 22 due to higher prices in its retail line, the NFL license and momentum in footwear. Argus takes a shine to Nike (NKE), boosting its rating to Buy from Hold with a lofty price target of $118 on shares. Morgan is launching coverage on Nike with an Equal-Weight.
Competitors: The bad times get worse for K-Swiss, after the shoemaker's Q4 miss and soft 2012 revenue guidance ($240M-$250M vs. consensus of $269.8M) demonstrate the challenges it faces in competing with larger rivals Nike (NKE) and Adidas (ADDYY.PK). K-Swiss' Q4 gross margin was just 25.6%, down 680 bps Y/Y and well below Nike's FQ2 gross margin of 42.7%.
Real Estate development: Nike (NKE) announces plans for the development of a new centralized campus in Shanghai, China. The nearly 600K square foot headquarters will be built at The Springs, Tishman Speyer's newest mixed-use development in Shanghai's Yangpu District. Nike (NKE) does its part in Athens, leasing 8.3K sq. ft. of prime rental space for at least 43% less than the previous tenant. Greek retail sales have been diving for months - 8.1% Y/Y at the latest read - and the space has been vacant for nearly 2 years. Nike's landlord is the Greek civil servants pension fund.
