Why Nike Is Up By Over 10%
On Thursday evening, Nike (NKE) shares rose by 10.7%. The apparel and shoe retailer posted full revenue falling by 10% for the year. Direct revenue in the fourth quarter was $4.4 billion, down by 14%. Gross margin fell, too, to 40.3% and down by 440 basis points.
With such weak figures, why did NKE stock rally?
Nike posted results that exceeded expectations. Despite unfavorable valuations, the brand has worth. This is pivotal to the company’s turnaround. On the conference call, Nike indicated that it does not expect much headwind from this point going forward.
Shareholders had expected tariff headwinds to hurt the business more.
Nike CEO Elliot Hill said that “we are turning the page, and the next step is aligning our teams to lead with sport through what we are calling the sport offense. This will accelerate our Win Now actions to reposition our business for future growth.”
Risks
Nike earned $0.14 a share on an adjusted basis. By comparison, the stock pays a dividend of $0.40. This suggests that the dividend payout is not sustainable.
Beware of Rally
Nike’s rally might fade in the coming days. Readers should consider more attractive value stocks in the retail sector. This includes Decker’s (DECK), Lululemon (LULU), and the Gap (GAP). Urban Outfitters (URBN) is also in an uptrend. Shares are up by 28.75% in 2025.
