Nike (NKE) will report 3Q18 earnings after the market closes. The call is scheduled for 5 PM ET.

Current Cap IQ estimates Q3 EPS of $0.53 (vs $0.68 last year) on revs of $8.39 bln, +5% Y/Y. 

• Current Cap IQ Estimates Q4 revs of $9.35 bln (+7% Y/Y)
• Current Cap IQ Estimates FY 18 revs of $35.8 bln (+4% y/y)
• Last quarter, NKE beat on EPS and revs and provided revs guidance on the call
  • Q3 Guidance: Co sees Q3 revenue growth at or slightly below the rate of Q2 (Q2 revenue growth +4.6%)
    • Expects gross margin to contract by 125-175 bps (followed by sequential improvement in Q4 gross margin); implies gross margin of ~43.2%
  • FY 18 Guidance: mid-single digit rev growth (2017 revs was $34.44 bln) 
    • Co continues to expect contraction of 50 to as much as 100 bps in FY18 gross margin

2Q18 Notables

• Gross margin declined 120 bps to 43.0% vs. ~42.4% guidance, as higher average selling prices were more than offset by unfavorable changes in foreign currency exchange rates and, to a lesser extent, higher product costs per unit.
• International biz is now over 55% of revs
  • Low teens growth in q2
  • China +15% currency-neutral revenue growth
• Strong dd growth across footwear and apparel
• Nike Brand revs +4%
• Nike Direct business +15%, driven by online growth of 29%, comp store growth of 6%
• North American ‘contracted' 5%
  • Says marketplace remains promotional in the short term
  • Co says it ‘sees momentum and a bull market building beneath the surface'

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