Sep 20, 2009
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Investors eyeing the margins at Nike

Sep 20, 2009

NEW YORK (Reuters) - Nike Inc's (NKE.N) shares have languished a bit in recent months, but their performance could improve if an earnings report later this month shows that pressure on margins has peaked, Barron's said in its September 21 edition.

Nike Air Yeezy spring-summer 2009 - Photo: www.nike.com
While analysts expect revenue to see a dip because retailers have been keeping tight control on inventories, investors will be closely watching for any signs that pressure on the gap between revenue and spending will ease, said the financial newspaper.

Nike, which dominates the global sneaker market with about 50 percent market share, has continued to grow despite the recession pressuring consumer spending, said Barron's.

Still, analysts' have hardly been bullish on the stock, seeing profits of $3.51 a share for Nike in 2010, less than an expected $3.81 a share this year, according to the report.

"That could prove conservative. And traders eventually turn back to quality after they tire of the mad chase of riskier beta," said Barron's.

Barclays analyst Robert Drbul predicts Nike could see margin improvement in future quarters. "Historically, this is a rewarding time to own the shares of Nike," he said, according to Barron's.

Nike's shares rose 50 cents on Friday 18 September to close at $58.59, off a 52-week high of $68 set September 26, 2008, but far higher than the $38.24 the stock fetched in March, according to Reuters data.

(Reporting by Lilla Zuill; Editing by Steve Orlofsky)

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