Nike (NKE) is expected to report fourth quarter results after the bell on Thursday with investors focused on how North American demand is holding up as some Nike wholesalers have warned of a consumer spending slowdown.
Nike's stock has stumbled into the report with shares down 6% on the year and analysts cutting their price targets on shares of the athletic apparel brand in recent weeks.
Here's what Wall Street expects, according to Bloomberg consensus estimates:
Revenue: $12.59 billion
Adj. earnings per share (EPS): $0.67
Gross margin estimate: 43.5%
Nike has built a growth story around a shift to the director-to-consumer business. In the prior quarter, Nike boasted a 17% increase from the year prior ,with direct-to-consumer revenue representing 42% of the company's total revenue.
But while stressing the importance of selling directly to customers and cutting out a middle-man wholesaler, Nike is building out more wholesaler partnerships. Earlier this month reports circulated that Nike will return to both DSW (DBI) and Macy's (M).
"Investors are worried that this is a reversal in Nike's shift from wholesale to DTC, but we don't think the strategy is broken," Bank of America Research Analyst wrote in a note on June 21. "We expect to hear an explanation of these moves on the conf call rather than an about-face on its focus on reducing undifferentiated wholesale."
Additionally, investors will be curious about demand for Nike products in general. The brand represents nearly 70% of the sales at Foot Locker (FL), which warned of a slowdown during its earnings announcement in May. Nike stock fell on that news, and Wall Street analysts raised concerns it could be a headwind for Nike moving forward.
"We continue to believe Nike is the #1 international athletic wear brand in China," UBS analyst Jay Sole wrote in a note on June 19. "However, the spending rebound post reopening has been less robust than expected. We believe Nike's current sales level is still running 10-20% below peak levels and we note the read-across to Nike from the secondary market for sneakers in China is just ok. We expect only modest improvement on that run rate over the rest of the year because of the macro economic outlook in China."
Josh is a reporter for Yahoo Finance.
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