Tuesday's Headlines: Nike Warns of Struggling Revenue
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Trip.com Group (TCOM) +3.9%
Hain Celestial (HAIN) +3.5%
IMAX (IMAX) +1.7%
Nordstrom (JWN) +1.6%
Casey's (CASY) +1.6%
Moving Down ⬇️
Smartsheet (SMAR) -7.9%
Sea Limited (SE) -6.7%
nCino (NCNO) -5.9%
Farfetch (FTCH) -5.8%
Stitch Fix (SFIX) -5.8%
Here are the stories that you need to know ahead of market-open today, Tuesday, the 28th of June.
Nike Warns of Struggling Revenue 💸
Shares in sportswear giant Nike (NKE) are down over 2% in pre-market trading following a mixed earnings call last night.
Nike managed to beat analyst estimates across the board for the quarter, with revenue of $12.23 billion and earnings per share of $0.90 both outpacing Wall Street’s predictions. However, the firm also warned that revenue for the upcoming quarter could suffer as a result of ongoing COVID-related disruptions in China — Nike’s most profitable market.
Chief Financial Officer, Matthew Friend, tried to allay shareholder concerns to a degree by stating that increased freight and product costs, along with supply chain issues and higher markdown levels were already factored into the company’s quarterly forecast.
Friend also outlined that while total sales fell by 5% and 19% respectively in the United States and China during the past quarter, this had nothing to do with overall demand for the company’s products. In the last three quarters, supply had been outpaced by consumer demand, but inventory levels are now finally beginning to normalize.
Nike stock dipped by 2% yesterday on the back of this report, leaving it down close to 33% year-to-date. While it still commands a significant proportion of the sportswear market and has one of the world’s most recognizable brands, that kind of fall-off will require significant work to correct.
Amazon Doubles Up on Prime Day 🛍
Amazon (AMZN) has plans to hold a second event for its Prime members later in the year. Amazon’s Prime Day — which is occurring on July 12 and 13 this year — is an annual sale that looks to drum up business in its Prime subscription service. It was inspired by Alibaba’s Singles Day and looked to recreate a Black Friday-style shopping event during the slower summer months.
A message that went out to its third-party sellers yesterday spoke of a “Prime Fall” event. While no dates were set, the company was looking to its merchants to provide plans of limited discounts by July 22:
“The Prime Fall deal event is a Prime-exclusive shopping event coming in Q4. Submit recommended Lightning Deals for this event for a chance to have your deal selected!”
The news comes off the back of Amazon’s slowest quarter in revenue terms since 2001 and will look to generate additional sales in the face of inflationary pressures on consumer spending. It may also look to salvage Prime Day’s slowing sales, as customers are ordering less and less each year according to a report by The Wall Street Journal. And while investment and furor around it have subsided compared to recent years — we certainly won’t see Ariane Grande or Taylor Swift in concert this year — it remains the biggest shopping event of the summer, yet still a ways behind its Black Friday promotions.
Amazon is down more than 30% year-to-date as the company, like many e-commerce players, is dealing with the one-two punch of a post-pandemic hangover and an uncertain economic future. The company has already scaled back its delivery operations and employed cost-cutting measures. Management has admitted to overestimating future demand after the pull forward from COVID-19 subsided, implementing hiring freezes, looking to sublet up to 10 million square feet of warehouse space, and closing down a number of brick and mortar stores too.
UiPath to cut 5% of workforce in profitability drive ✂️
UiPath is set to cut 5% of its workforce according to an SEC filing. The provider of automation software said the move was part of a restructuring plan that would propel the company towards profitability.
UiPath’s software helps businesses eliminate repetitive tasks through Robotic Process Automation (RPA), allowing businesses to automate all types of work flows across multiple applications. In doing so, UiPath helps businesses cut down on their administrative workloads, allowing employees to focus on their core competencies and eliminating their reliance on Business Process Outsourcing (BPO) — in which tasks like document processing and data entry are outsourced to countries with lower labor costs.
“In the context of ongoing business prioritization, UiPath is undertaking a restructuring action that will primarily focus on the effectiveness of our go-to-market organization,” a spokesperson for the company said. “This is about continuing to drive sustained, profitable growth.”
UiPath has been one of the bright-spots in an otherwise brutal sell-off in technology stocks over the past few months. Earlier this month, the company posted quarterly results that beat guidance on every metric, with revenue up 32%, annual recurring revenue up 50%, and dollar-based net retention at 138%. The company also raised its full-year guidance despite facing significant currency headwinds. However, UiPath is still burning through cash, though it does have $1.8 billion in cash and equivalents on the balance sheet.