NKE - BEARISH SCENARIOAlthough Nike's projection of more favorable transportation costs and strong full-price sell-through of merchandise indicates positive signs for margin performance, there are concerns about the company's expectations regarding selling, general, and administrative expenses. These expenses, including marketing spend, are anticipated to rise slightly faster than revenue as Nike invests in driving demand prior to key sporting events.
Being a global brand with $51 billion in annual revenue, Nike is susceptible to economic softness in the global market. Weak demand in Europe limited the company's growth to single-digit increases in that region. Furthermore, apparel sales in North America experienced a decline of 2% during the quarter, indicating weakness in its domestic market.
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