Nike Stock Higher on Russia Exit Report Ahead of Q4 Earnings

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Updated 2:55 PM EST

Nike (NKE) Shares rose on Thursday after the sportswear giant said it would exit its business operations in Russia less than a week before its fourth quarter results.

Nike, which suspended operations in its stores and e-commerce channels in Russia and Ukraine earlier this year, said it would scale back operations over the next few months and leave the county permanently, Reuters reported.

This decision follows similar decisions by blue chip US companies such as Starbucks. (SBUX) and McDonald’s (MCD) which sold its operations in Russia earlier this month and suffered a non-cash hit of around $1.3 billion.

Shares of Nike rose 2.1% late in the afternoon after it was confirmed to exit Russia to change hands at $107.10 apiece, a move that would leave the stock’s decline since the beginning of the year at around 35%.

Nike will release its fiscal fourth quarter results on Monday, after markets close. The group declined to provide guidance for its next fiscal year when it reported third quarter results in March, but noted that “market demand continues to outpace available supply as the supply of inventory begins to normalize … laying the foundation for another year of strong growth.”

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A host of Wall Street analysts, however, lowered their price targets on Nike shares, citing the impact of Covid restrictions in China on both the group’s wider supply chain and its overall sales. in the country, which exceeded $2.1 billion in the last quarter.

Deutsche Bank on Thursday lowered its price target by 13%, to $152 per share, after a modest nudge from Cowen & Co. to $133 per share.

Earlier this week, Bank of America said “conditions in China remain clouded by COVID shutdowns, making it difficult to chart a trajectory of recovery for FY23,” and lowered its price target by 3. dollars, at $122 per share.

Nike earned 87 cents per share for the three months ending February, down 3.3% from a year ago but well ahead of Street’s consensus forecast of 71 cents. Group revenue climbed 5% to $10.87 billion, Nike said, on strong demand in the United States that offset an 8% drop in Covid-hit China.

North American sales rose 9% to $3.88 billion, Nike said, thanks to its continued push towards the consumer.

Equipment sales were up 36% year over year, apparel was up 12% and branded footwear was up 5%.

Regarding the final months of its fiscal year, Nike said in March that with all of its Vietnam-based factories operating, “we’re going to start to see better supply flow” to North American markets, even as shipping times remain high due to inland transportation issues, thanks to overall demand that “significantly” exceeds inventory levels.

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