Nike Earnings Call Analysis: insights ahead of Nike earnings

We put the Amenity Viewer to work in preparing for tonight’s Nike earnings call, quickly drilling into the key drivers from earnings calls among competitors and channel partners.  We highlight key themes and data points to watch.

Beta opportunity: This is the optimal time to take advantage of Amenity Viewer to prepare for the upcoming earnings season, discover emerging trends, and generate new ideas looking to 2019.  We encourage you to share with any of your colleagues who would benefit.  You can join our beta here. Also be on the lookout for webinars for all Viewer users, where we will demonstrate key features and discuss current trends we see in the earnings call transcripts.      

Now on to Nike Earnings Call Analysis:

Overall trends appear positive outside of Dick's and Under Armour, which is fitting considering Dick's specifically blamed Under Armour for some of its own weakness.  We see broad-based eCommerce strength and favorable pricing environment as key issues to watch, while keeping an eye on potential offsets from higher input costs.  

eCommerce strength

  • Foot Locker: “comp sales at our direct-to-consumer channel were up 9.3%”
  • Dick's: “our eCommerce business increased 12%”
  • Lululemon: “By channel, we saw store comps increase 10% and digital was up 47%”
  • Lululemon: “In China, our e-commerce business continues to lead the way with a comp increase of over 200%.”
  • Adidas: “We continue to see excellent growth in e-com with 26% growth”
  • Under Armour: “Direct-to-consumer revenue grew 7%, driven by continued strong results in our international and e-commerce businesses.”
  • Hanesbrands: "Consumer-directed sales increased to 22% of total sales, including double-digit growth online. "
  • Nike (last quarter): "I would say that we have momentum going into the year, and that’s really primarily fueled by new innovation platforms that we’re scaling; NIKE Direct; certainly NIKE Digital, which accelerated to well over 30% growth.”

Favorable pricing environment, which is a continuation of trend cited by Nike last quarter

  • Foot Locker: “higher merchandise margin rate was primarily the result of lower markdowns at our U.S. banners”
  • Dick's: Partially offsetting improved merchandise margin were higher freight and shipping costs”
  • Adidas: “There was better pricing mix offset by less favorable channel and category mix”
  • Nike (last quarter): "Gross margin expanded over 60 basis points in Q4, exceeding our own expectations due to accelerating full-price sales and Nike digital growth."  

Potential issue to watch for: Input costs

  • Hanesbrands: “favorable product mix was offset by higher raw material costs, start-up manufacturing inefficiencies and higher distribution costs.”
  • Dick's: Partially offsetting improved merchandise margin were higher freight and shipping costs”  
  • Nike (last quarter): “We are forecasting a bit of pressure on gross margin from select input cost headwinds within labor, oil, freight, materials.”

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This communication does not represent investment advice. Transcript text provided by S&P Global Market Intelligence.

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