Nike, Mercedes-Benz, FedEx and Investec
Nike (NKE)
Nike stock jumped overnight as the sports apparel company said CEO John Donahue was stepping down, with longtime company veteran Elliott Hill taking over.
Nike’s stock rose 8% during pre-market trading as investors welcomed the announcement after clamouring for changes at the company. Nike’s stock has dropped 24% so far this year.
Nike’s board of directors on Thursday said Hill, a Nike veteran who previously served as president of consumer marketplace before retiring in 2020, will return to take the top job effective 14 October.
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Donahoe said: “It became clear now was the time to make a leadership change, and Elliott is the right person”.
The company’s sales were flat last quarter and the retailer predicted sales would drop another 10% next quarter as Nike’s classic brands slow down. Nike has been criticised by analysts for a lack of innovative new sneakers.
Mercedes-Benz (MBG.DE)
Mercedes-Benz revised down its full-year profit outlook for the second time in under two months, following a continued slump in sales volumes in China, the world’s largest car market. The German luxury carmaker cited ongoing weakness in Chinese demand for premium vehicles for the adjustment.
“The downgrade comes amid further deterioration of the macroeconomic environment, mainly in China. GDP growth in China lost further momentum amid weaker consumption as well as the continued downturn in the real estate sector,” Mercedes-Benz said in a statement.
The latest downgrade reflects deepening concerns about the broader Chinese economy, where slowing GDP growth, weaker consumer spending, and a persistent downturn in the property sector have taken a toll on the luxury car market. Mercedes-Benz had previously cut its profit margin forecast in July but has now been forced to further revise its projections.
Shares of the company, which are listed in Frankfurt, dropped 3% following the announcement.
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In light of these challenges, the Stuttgart-based company has adjusted its 2024 outlook for both its cars division and the broader Mercedes-Benz Group. The automaker now anticipates an adjusted return on sales for Mercedes-Benz cars in the range of 7.5% to 8.5%, down from its prior estimate of 10% to 11%. This signals an expected return on sales of around 6% for the second half of the year.
As a consequence of the reduced sales expectations, Mercedes-Benz Group’s earnings before interest and taxes (EBIT) are projected to fall significantly below last year’s level. Free cash flow for the industrial business is also forecasted to be considerably lower than in 2023.
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“Additionally, the second half of 2024 is expected to be impacted by various valuation adjustments. Furthermore, the dynamic pricing environment is expected to continue,” the company said.
FedEx (FDX)
FedEx Corporation slashed its full-year guidance on Thursday after reporting fiscal first-quarter earnings that significantly missed Wall Street expectations, driven by weakness in its core Federal Express segment.
Shares of the logistics giant dropped 9% in after-hours trading following the disappointing results.
For the quarter, FedEx posted adjusted earnings of $3.60 per diluted share on revenue of $21.6bn (£16.2bn), falling short of analysts’ projections. Wall Street had been expecting earnings of $4.86 per share on $21.96bn in revenue.
Margins in the company’s Federal Express business, a key contributor to its overall performance, shrank to 5.2% in the first quarter, down from 7.1% in the same period last year.
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In light of this, FedEx revised its full-year outlook for fiscal 2025, narrowing its adjusted earnings per share (EPS) guidance to between $20.00 and $21.00, compared with its previous forecast of $20.00 to $22.00. The company also tempered its expectations for revenue growth, which is now projected to rise by a low single-digit percentage year-on-year, down from earlier estimates of a low-to-mid single-digit increase.
Despite the downgraded outlook, FedEx reaffirmed its commitment to shareholder returns, announcing plans to repurchase an additional $1.5bn worth of stock during fiscal 2025, bringing its total buyback program for the year to $2.5bn.
Investec Group has indicated a robust financial performance for the first half of the year, forecasting pre-provision adjusted operating profit between £520m and £550m, a year-on-year increase of 6.7% to 12.9%, according to a trading update.
The bank expects adjusted operating pretax profit in the six months to September to be between £450m and £482m, up from £441m in the same period last year.
Headline earnings per share could be anywhere from 1.4% below last year’s 36.9p to 3.5% ahead. This includes the costs of “executing strategic actions”.
The group’s performance has been driven by strategic initiatives, including its recent combination with Rathbones, which has influenced earnings. However, the firm noted that prior one-off gains have resulted in lower basic earnings per share.
Despite headwinds in the UK market, Investec highlighted several positive factors, including strong revenue momentum, an improved cost-to-income ratio, and solid credit quality.
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#Nike #MercedesBenz #FedEx #Investec