A Comprehensive Nike Q1 Earnings Preview, Plus Some Under Armour & Gap News

 

Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains dives into what to expect from Nike’s NKE fiscal Q1 financial results. Rains then evaluates the latest announcements from Gap GPS and Under Armour UAA aimed to help them better compete in a changing retail environment.

Three weeks removed from the start of the Colin Kaepernick saga, Nike looks poised to report strong quarterly earnings after the bell Tuesday. Shares of NKE opened lower Monday after hitting a new high Friday. In fact, Nike has been one of the Dow’s top performers this year. Coming into Monday, Nike stock had climbed 36% since the start of 2018, which topped Apple’s AAPL 29% and Microsoft’s MSFT 33% surge.

Nike faced a somewhat turbulent stretch not too long ago that saw the sportswear giant’s North American sales growth decline for nearly a year. But Nike management did not waver from their assurance that the firm would return to growth in its largest market, which it did last quarter. This growth was spurred by a direct-to-consumer commitment, which includes a slew of Nike apps as well as partnerships with Amazon AMZN, Chinese e-commerce power JD.Com JD, and even Facebook FB.

Looking ahead, Nike is projected to see its Q1 revenues jump 8.9% to hit $9.88 billion, based on our current Zacks Consensus Estimate. Meanwhile, Nike’s quarterly earnings are expected to jump by 8.8% to $0.62 per share. Nike’s geographical and specific business unit estimates look strong as well.

The episode then shifts its focus to the larger sports apparel market beyond Nike and its biggest rival Adidas ADDYY.

Gap GPS announced late last week its new men’s athleisure brand called Hill City. The new line comes as companies try to expand into men’s athleisure as firms such as Lululemon LULU continue to expand.  

Hill City will act as the counterpart to Gap’s Athleta women’s brand. The move also highlights the strength of the overall athleisure industry. Meanwhile, Under Armour UAA said that it plans to cut 400 jobs globally as the sportswear firm continues to try to cut costs and streamline its business as it fails to gain traction in some key growth areas.

As a reminder, if you feel that we missed something, or if you have any topic suggestions, shoot us an email at podcast@zacks.com. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating on Apple Podcasts.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
JD.com, Inc. (JD) : Free Stock Analysis Report
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
The Gap, Inc. (GPS) : Free Stock Analysis Report
 
Adidas AG (ADDYY) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Under Armour, Inc. (UAA) : Free Stock Analysis Report
 
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