How's Nike's Strike Ahead Of Q1 Earnings? Goldman Cheers 'Goal!'

With Nike Inc (NYSE: NKE) scheduled to report its Q1:17 results on September 27, Goldman Sachs’ Lindsay Drucker Mann noted that channel check indicated “a mixed setup into the quarter.”

Mann maintains a Buy rating on the company with a price target of $66.

Firming Retail Trends

The analyst mentioned that U.S. retail trends had been stabilizing following the liquidations of The Sports Authority (TSA), and that a soft U.S. retail environment had been one of the concerns during the TSA bankruptcy and subsequent product liquidations.

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“Sell-through has improved across key retail accounts while inventory levels are normalizing,” Mann stated.

International Markets

The analyst also pointed out that the key international markets had been witnessing tough compares, with weaker futures momentum, saying that “NKE W. Europe should reap the benefit of UEFA Euro 2016 which fell in the middle of 1Q, but we expect sales growth to normalize through the balance of FY17.”

On the other hand, retail trends softened in August for China and Nike will lap its toughest comps for the year during Q1.

In addition, competition has been intensifying with competitors recording accelerated market share growth versus Nike.

Expectations

“For 1Q, we model +8 percent FX-neutral revenue growth and EBIT declines of 19 percent driven by gross margin degradation and elevated SG&A spend. We model EPS of $0.54, slightly below consensus of $0.56,” the analyst added.

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