Nike Poised to Beat Q1 Expectations as Margins Improve

Nike Inc (NYSE:NKE, XETRA:NKE) is on track to beat expectations in its first quarter, according to a new analysis from Jefferies. The broker believes that better-positioned inventories will support a cleaner marketplace, with management bringing forward expectations for gross margin expansion to the first quarter.

This follows a fourth-quarter gross margin decline of just 10 basis points excluding tariffs, compared with guidance for a 25-75 basis point decline. Jefferies attributed the better margin performance to lower North American discounts, reserves and cancellations.

The broker expects revenue of $11.5 billion, at the high end of guidance and above consensus of $11.3 billion, alongside earnings per share of $0.48 versus consensus of $0.44. Jefferies' expected earnings beat is expense-led, with selling, general and administrative costs modeled at 34.5% of sales versus consensus of 35.3%.