Nike $NKE is up around 13% this morning, the company's biggest rally since summer of last year. Nike stock is still down 30% this year but after a positive earnings report, investors are seemingly optimistic.
What they're saying: “We're executing in the areas we spoke to 90 days ago as we take decisive action to clear excess inventory,” Nike CEO and president John Donahoe told investors on Tuesday. “We believe the inventory peak is behind us. The actions we’re taking in the marketplace are working.”
While wholesale growth, offloading inventory, and China's reopening are important aspects, the 16% YoY increase in direct-to-consumer sales is the real key to Nike’s growth story as it stays relevant by telling stories through its products and remains a highly desirable brand athletic apparel.
Source: Yahoo Finance
Consumer Confidence is Up: Consumer discretionary stocks led gains among the major S&P 500 sector indexes, while financial shares also gained.
Nike peers Lululemon Athletica Inc $LULU, Under Armour Inc $UAA, and Vans sneaker maker rose between 1.3% and 2.8%.
FedEx Corp $FDX, which sparked a market selloff in September after pulling financial forecasts, rose 4%, on the delivery company's plans to slash an additional $1 billion in costs.
Source: Reuters
Bull trap, anyone? The underlying macro conditions remain very weak and it appears that this could be just a little seasonal bounce until the end of the year.
Here's a defined outcome trade on Nike to capture up to 5% (17% annualized) profit but also provides downside protection of 15% (below $99.77) through maturity.
Buy 1 $115c, Sell 1 $120c, Sell 1 $100p, all exp 4/21/23
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