The Market's Got It All Wrong. Nike's a Screaming Buy After the Sell-Off
Nike (NYSE: NKE) stock tumbled after its fiscal 2023 first-quarter earnings report was released last week, and it's easy to see why.
Revenue for the quarter (which ended Aug. 31) grew just 4% year over year to $12.7 billion, and earnings per share fell 20% to $0.93. Both numbers compared favorably to estimates, but inventory levels rose 44% from a year ago, which is forcing Nike to aggressively discount some of its products. Like other retailers, it boosted inventory levels to overcome supply chain delays, but those delays have largely resolved themselves.
Nike's guidance reflected this, as management forecasted gross margin to fall by 350-400 basis points and said on the earnings call that supply chain costs as well as freight and logistics would be elevated as well. That guidance implied another sharp drop in profits in the current quarter and seemed to be the primary reason the stock price fell 13% on Sept. 30.
Source Fool.com
