Nike reported Q2 earnings ending 11/30/2022 after market close today. It’s better than expected. Revenue was $13.32 billion vs. $12.57 billion expected. EPS was 85 cents vs. 64 cents expected. Stock surged 10+% after hours. Inventory levels remain elevated though and are 43% higher than the same quarter last year. Gross margins also decreased 300 basis points primarily due to higher markdowns to liquidate inventory.
Overall, it’s a pretty good quarter and the supply chain and inventory issues are getting resolved. I found it quite impressive that Nike’s revenue is growing 30+% across the board except for China on a constant currency basis, given their revenue is already $13B+ a quarter. China is experiencing a severe recession and they are currently battling the surging COVID cases. I do expect that to be resolved in a quarter or two and we will see a big rebound of the Chinese economy. I believe Nike will be a beneficiary of that rebound.
As mentioned in one of my previous posts, I believe NKE 0.00 stock was not expensive after the stock tanked to ~$80 after the Q1 earnings. NKE 0.00 has bounced back to over $100 prior to this earnings report and is expected to trade higher tomorrow. I believe the worst is behind them and once the China Covid situation is resolved, they are going to do very well across the globe.