NKE: Saved By The Tax Rate
Nike (NKE) reported underwhelming earnings after the close Monday. While EPS was down only 3% to 90 cents, Earnings Before Interest and Taxes (EBIT) was -26%. What gives? NKE’s EBIT margin was down 390 basis points year over year but it was saved by a $410 million swing in taxes (26 cents/share). (NKE paid $345 million in taxes a year ago but had a $65 million tax benefit this quarter). That’s not a high quality EPS number.