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Non-Tech : Nike -- Ignore unavailable to you. Want to Upgrade?

To: Duker who wrote (2348)	9/17/1999 10:41:00 AM
From: Labrador	Read Replies (1) \| Respond to of 2403

From Briefing 08:15 ET ****** Nike (NKE) 54 3/4: Though Nike's stock shot up in after hours trading on news the company beat the consensus estimate by four cents in reporting a Q1 gain of $0.70, Briefing.com doubts the stock will sustain its momentum in today's session... The reason is simple... NKE has yet to solve its apparel problem. Whether its increased competition, changing fashion trends and/or a less visible Michael Jordan, I'm not sure, but I do know that NKE won't reclaim its status as a premier growth stock until apparel revenues get back on track... Global apparel sales fell 6%, weighed down by the 11% drop in U.S. sales... It was the eighth straight quarter in which U.S. clothing sales fell... Only Europe posted a modest 5% gain... Due to weakness in the company's apparel business total sales for the quarter were essentially flat at $2.5 bln... We were also unimpressed by the mere 2% jump in global futures orders... Company went on to note that it sees 5% growth in futures orders for Q2 and very low single-digit growth in Q3... Apparently, the the days of double-digit futures orders growth are gone... Like many in the investment community, Briefing.com applauds NKE for bringing its costs down (selling and administrative expenses fell to 25% of sales from 26%) and its gross margins up (38.6% v. 37.6%)... It leaves the company well positioned to leverage a modest sales turnaround into big earnings improvement... Unfortunately, global sales aren't showing much improvement - particularly in the area recently considered NKE's ticket to growth - apparel... Until the company solves its apparel problem and returns to double-digit top line growth, we don't think the stock deserves to trade at 27x estimated FY00 earnings... As such, Briefing.com is looking for modest multiple contraction in the days and weeks to come... First support is at 50, with penetration resulting in a slide to the 46 area. -- RW