Nike Earnings Loom: Analysts Cut NKE Stock Targets On China, Other Headwinds

Nike (NKE) is experiencing a dip in form as it gears up to report fiscal fourth-quarter results. Covid lockdowns in China took a toll in the May-ended quarter. The world’s largest sports retailer also just announced a plan to fully exit Russia.

Analysts are placing their bets leading up to the announcement, with a host of Nike stock price target cuts.

For the period, Wall Street expects Nike earnings per share to fall 13% to 81 cents with revenue down 2% to $12.07 billion.

The athletic-wear giant has faced a number of headwinds over the past few quarters. Last summer, pandemic shutdowns forced Nike to suspend its operations in Vietnam, where it makes 80% of its footwear and half its apparel. NKE resumed full production in November. This spring, Covid lockdowns in China caused more store and factory closures. China accounts for 17% of Nike’s sales, trailing only the U.S. at 33%.

Sneaker Scarcity
The latest supply chain disruptions will only worsen NKE’s inventory issues. The company has been experiencing shortages in its Nike, Jordan and Converse shoes in most of its markets. This has led to higher production costs for Nike, which is reflected on its price tags, analysts note.

“Marketplace demand continues to significantly exceed available inventory supply, with a healthy pull market across our geographies,” CFO Matt Friend said in Nike’s third quarter earnings report.

On June 23, Nike announced it will fully exit Russia and will be winding down business there over the next few months. The company had suspended its operations there on March 3, following the invasion of Ukraine.

“Our priority is to ensure we are fully supporting our employees while we responsibly scale down our operations over the coming months,” a Nike spokesperson said in the announcement.

Many other retailers and restaurants, including Adidas (ADDYY) and McDonald’s (MCD), have made similar decisions. But it’s unlikely to have a material impact on Nike’s finances. Russia accounts for less than 1% of the company’s revenue.

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Nike (NKE) is experiencing a dip in form as it gears up to report fiscal fourth-quarter results. Covid lockdowns in China took a toll in the May-ended quarter. The world’s largest sports retailer also just announced a plan to fully exit Russia. Analysts are placing their bets leading up to the announcement, with a host…

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