Nike gross margins decelerate across regions, says BMO Capital

BMO Capital keeps an Outperform rating and $92 price target on Nike (NKE) after reviewing the company’s Q2 10-Q. The filing was highlighted by sequential gross margin deceleration across regions, with North America, China, and EMEA markets booking inventory reserves, the analyst tells investors in a research note. Q2 also marked the first quarter in six without North America gross margin expansion, the fourth consecutive quarter of contraction in greater China, and the first inventory reserve build in EMEA since Q2 of last year, BMO adds. The firm contends that while it still believes that Nike can return to what made it special – outspending competition with compelling storytelling – this “may take time”.