‘this is a blue-chip on sale’

Nike Inc (NYSE: NKE) reported better-than-expected revenue for its fiscal first quarter on Thursday but shares slid 10% after the bell on a hit to profit and gross margins.

Stephanie Link reacts to Nike’s Q1 results

Inventory was up 44% as well. Still, Hightower’s Stephanie Link recommends buying Nike stock, especially if you’re a long-term investor. This evening on CNBC’s “Closing Bell: Overtime”, she said:

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You have to wait a quarter or two to get inventory to run down. But to me, it’s a quality name on sale. If you’re selling it on this quarter, that’s silly because you really want to own this for the next three to five years. This is a blue-chip on sale.

Wall Street also has a consensus “overweight” rating on shares of Nike that’s now down more than 45% for the year.

Nike Inc Q1 financial highlights

• Net income printed at $1.5 billion versus the year-ago $1.9 billion
• Per-share earnings tanked quite a bit from $1.16 to 93 cents
• Sales went up 4.0% on a year-over-year basis to $12.7 billion
• Consensus was 92 cents of EPS on $12.28 billion in revenue
• Gross margins contracted 220 basis points to 44.3%

Nike blamed higher markdowns, freight and logistics costs for the hit to margins.

Other notable figures in Nike’s Q1 earnings report

Other notable figures in Nike’s earnings report include a 16% decline in revenue from China that was partially offset by a 13% increase growth in North America. The footwear and athletic apparel company returned roughly $1.5 billion to shareholders in Q1. Link added:

It’s lost seven multiple turns since the beginning of the year, trades at 20 times 2024. I think there’s a positive and a negative to this report but it’s not thesis changing either way. Bulls stay bullish and bears stay bearish.

Strength of the U.S. dollar was also a headwind for Nike Inc in the first quarter.