Nike stock rises after topping Q2 earnings expectations

Yahoo Finance sports reporter Josh Schafer breaks down Nike's second-quarter earnings results.

Video Transcript

DAVE BRIGGS: All right, an earnings alert. Nike shares up just over 1% after reporting. Josh Schafer is here with a deeper dive into the numbers. Josh, what are we seeing, buddy?

JOSH SCHAFER: Yeah, Dave, a little bit of a mixed picture here for Nike. We've seen the shares go up, down, and now back up again. So let's get into the numbers here. We got Q2 revenue for 2023 coming in at $13.32 billion. That was versus $12.58 billion estimated. And then when you take a look at EPS, you got EPS coming in at $0.85. That was versus $0.65 that was estimated for that.

Now, a couple of key metrics that might have been sending the stock down a little bit here, Dave. When you look at direct-to-consumer sales, that came in at $5.4 billion. That's versus the estimate of 5.64 billion. We know that's a big growth metric for Nike. Inventories also up 43% year over year, another number we've been watching. Notice that number isn't changed much from 44% last quarter. Greater China revenue comes in at $1.7 billion. That's versus an estimate of $1.81 billion. So it came in lower than estimates there.

And then you have gross margins coming in at 42.9%. It beat expectations, Dave, which were 42.1%, but down on a year over year basis. So Nike still taking a hit at those margins. One thing that I think is going to be interesting to hear later on from president and CEO John Donahoe in the call is going to be what happened with these sales. The quarter ended November 30, so we got a little bit of Black Friday. Nike had more sales in November this year than they had last year, trying to get rid of a little bit of that inventory. How'd that go for the company? Hopefully, we get a little bit more clarity in the next hour or so.

DAVE BRIGGS: Markdowns was clearly the theme for Nike, as they tried to work that inventory mess out, but it appears they have not. Josh Schafer, thank you.