Nike Stock (NYSE:NKE)
After Adidas (OTCQX:ADDYY) provided a negative preliminary report for the third quarter of 2018, Nike stock (NYSE:NKE) dropped by around two percent in a matter of minutes and entered negative territory.
The extensive German footwear and clothing company warned that full-year sales would be lower than initially anticipated and margins would be tighter. Greater China was pointed out as a particularly painful region since sales in that region dropped at a “high double-digit pace” during the third quarter. As a result, Nike stock dropped on the news.
According to Adidas, “The company’s new outlook takes into account a further deterioration of traffic trends in Greater China as well as a significant inventory build-up as a result of lower consumer demand in major Western markets since the beginning of September,” which is expected to lead to higher promotional activity during the remainder of the year. “The company’s new outlook takes into account a further deterioration of traffic trends in Greater China as well as a significant inventory build-up as a result of lower consumer demand in “The updated projection also takes into account several one-time charges that are expected to have an effect on the bottom line performance of the firm in both the third and fourth quarters of the year.”
After the third quarter, it was reported that the total inventory levels had increased by 63% on a currency-neutral basis. Instead of guiding for growth in the mid-to-high-single digits for currency-neutral sales in 2022, Adidas is now only expecting growth in the mid-single digits for the whole business in 2022. The new projection for gross margin in 2022 is around 47.5%, which is 1.5% lower than the previous estimate.
In addition, the operating margin is expected to be about 4%, a significant decrease from the previous projection of 7%. The net income from continuing operations is anticipated to reach around €500 million, down from an earlier level of €1.3 billion. This decrease is primarily driven by one-time expenses of approximately €500 million.
Near the middle of the trading day, shares of Adidas (OTCQX:ADDYY) fell by more than 2%. In contrast, Nike stock returned marginally into positive territory following a sharp dip.
Featured Image- Megapixl @ Mohammedsoliman4
Author Shariq Khan 
