Bought NIKE (NKE)

• Nike said Q4 2009 earnings dropped -30% due to $195 million in restructuring charges, as revenue and margins slid and future orders dropped across all regions.
• Sportswear market has begun to soften in the middle of larger declines in the retail sector.
• Nike has responded to the global downturn by slashing expenses, compensating for dwindling sales. It is cutting back on marketing, terminating orders from factories in Asia, and laying off 5 percent of global staff.
• Latest results included the previously disclosed restructuring charges, while the prior-year quarter’s results included a $32 million in gain from Nike’s sale of Bauer Hockey.
• Revenue decreased –7.4% to $4.71 billion. Excluding changes in currency rates, revenue would have been flat from a year ago.
• Recent decrease in the value of the US dollar is expected to help Nike’s result in the following quarter, although its hedging strategy minimizes to effects of currency fluctuations.
• Analyst were expecting a per share earnings of 0.96c per share.
• Sales of Nike’s subsidiaries including converse, Cole Haan & Hurley dropped –5% to $702.3 million.
• Asia-Pacific sales was flat. But fell –3% in the Americas and –19% in Europe, the middle east and Africa.  US revenue fell 2% to $1.6 billion. As athletic footwear sales increase +2% buy apparel sales decline –15%
• Nike brand President Charlie Denson said the company had not resorted to heavy discounting. Executives defended its strategy of selling products at various price points and venues, from small boutiques to large lower-cost chains.

Based on the company’s cost cutting measures, SG&A should be coming down and add that to the recent decline in the dollar Nike should have a better footing going forward.  Fundamentals of this company are still solid and Nike is only trying to become even more leaner going forward.

Technicals

Nike’s shares dropped considerably hard ever since that dismal earnings release causing it to break its major trendline.  Support is currently at the $49.21 level but based on to day’s price actions it appears to be holding up fairly well above the 100DMA at $50.00.  Will drill my way into this stock adding more if it falls closer to $49.21.  But overall, I believe all the modest guidance going forward has been factored in at these levels considering the 16% drop from its highs.  orders placed at $50.98 with a stop loss at the $49 level.  But a close above that in the next few days will lead me to add more.  Strong resistance at $52.00.  But short to medium term target price placed at $55.00

Source: WSJ & Barron's