DECK

Nike’s Earnings Expansion Will Continue to Be Challenged

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On Thursday, Nike (NKE) reported strong fiscal second-quarter results. Revenue expanded 8% during the period (9% on a currency neutral basis), while diluted earnings per share from continuing operations nudged 4% higher, to $0.59 per share. Sales at its Nike brand expanded in every product type, geography and key category. Sales in its Converse brand advanced 11% on a currency-neutral basis thanks to strong performance in its largest owned markets. Though we liked that gross margins advanced 140 basis points in the period thanks to a mix of higher-margin products, higher prices, and lower input costs, selling and administrative expenses leapt 14%, exceeding the pace of revenue growth. Earnings before interest and taxes for the three months ended November 30, … Read more

PLG Brands Continues to Drive Wolverine Worldwide

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Shoe seller Wolverine Worldwide (click ticker for report: ) posted strong third-quarter results driven largely by former Best Ideas Newsletter portfolio holding Collective Brands’ PLG brands. Revenue surged 9% year-over-year on a pro forma basis and more than doubled on a year-over-year reported basis, to $717 million (modestly exceeding consensus estimates). Earnings per share were even stronger, rising 61% year-over-year to $1.16 (excluding acquisition costs) and coming in handily above consensus expectations. Year-to-date, the company has generated $96.2 million in free cash flow, equal to 5% of total revenue. Image Source: Wolverine Worldwide Wolverine’s ‘Lifestyle’ and ‘Performance’ groups were the drivers behind revenue expansion during the quarter as the company continues to capitalize on the success of recently-acquired Sperry Top-Sider … Read more

Nike Marks a Strong Start to Earnings Season

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After becoming the newest member of the Dow Jones Industrial Average, athletic apparel giant Nike (click ticker for report: ) posted a fantastic start to its 2014 fiscal year. First quarter revenue jumped 8% year-over-year to $7 billion, roughly in-line with consensus estimates. Earnings per share, on the other hand, soared past consensus expectations, growing 37% year-over-year to $0.86. Free cash flow totaled $379 million, equal to 5.4% of net revenue. Product Demand Remains Robust The primary reason behind Nike’s continued strength in the athletic apparel space is the robust demand for its products. The firm continues to innovate, particularly in the running and basketball spaces, and the innovations helped demand remain strong across all geographies. Revenue in North America, … Read more

Strength in Footwear Persists

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Shoe retailers DSW (click ticker for report: ) and Brown Shoe Company (BWS) posted better-than-expected second-quarter results. DSW On Tuesday, DSW’s second-quarter release revealed that its sales surged 9.7% year-over-year to $562 million, easily exceeding consensus expectations. Earnings per share adjusted for luxury testing and the termination of Retail Venture Inc’s pension plan increased 47% year-over-year, to $0.97. Image Source: Valuentum, Company Filings After same-store sales slipped 2.4% during the first quarter, DSW returned to growth in the second quarter, with same-store sales 4.4% higher than the same period a year ago, re-accelerating the two-year comp trend (8.6%). Not only has DSW added some new merchandise to stores with necklaces and other small accessories, but management pointed to strength in … Read more

Are Any Rumored Buyouts Worth Betting On?

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Buyouts and private-equity acquisitions can provide powerful stock moves and often act as the catalyst to drive stock prices to intrinsic value. In the portfolio of our Best Ideas Newsletter, we had held shares of Collective Brands. We liked the company’s valuation, relatively small size, and its attractiveness to other companies (among other things). And while we’d never own a stock solely on speculation of M&A activity, a buyout turned out to be the catalyst for our call on Collective Brands to work out for members. Shares proceeded to appreciate over 35% on our cost basis! In recent months, we’ve heard rumors of cash-heavy companies and private equity funds interested in several different deals. Let’s take a look at a few higher-profile names. … Read more