by Amy Calistri, editor Stock of the Month
When I first bought shares of the athletic footwear and clothing company Nike
) last October, I bought only half of my intended position.
recently announced its fiscal 2012 fourth-quarter results and the
company missed analysts' expectations by a wide margin. With the stock
is trading down, I am going to buy additional shares.
Although revenues grew 12% in the quarter ended March 31, earnings per
share dropped 6% compared with the same quarter a year ago.
the drop in earnings shouldn't be taken at face value. Nike took a $24
million restructuring charge to streamline its operations in Western
It also accelerated its research and development
spending on its new digital product line. Nike even settled a customs
fee from an emerging markets territory related to imports that occurred
during the past four fiscal years.
Nike grew revenues in every geography and product line. North American
revenues grew 13%. Revenues from Central and Eastern Europe were up 20%.
Even Western Europe, where debt and austerity are weighing on
economies, Nike's revenues were up 7%. And China may be slowing down,
but Nike was still able to grow revenues by 14% in that competitive
Still, Nike is facing some macroeconomic headwinds. The
weaker euro will continue to be a drag on Nike's results for at least
the next quarter. And slower economic growth in Western Europe and China
will also be a challenge for Nike to overcome in the next three to six
This was clearly not the quarter I was hoping for from
Nike. But I truly believe Nike will navigate the macroeconomic headwinds
better than its competitors.
It will continue to invest in
innovation during slower quarters -- precisely when its competitors have
to cut back -- and gain market share.
The 2012 Olympics are
less than a month away. Just a few months after that, NFL players --
clad in Nike uniforms -- will take to the field for another season. I
can't believe that Nike isn't a company I want to still own a year from
Action to Take --> Nike's recent announcement shook up a
lot of investors and analysts. Its share price may not find a lot of
love in the next few months.
But I want to be in Nike for the
long haul. In addition to adding to my position now, I will look for
another opportunity to buy even more shares in the next few months.