Before the Bell: Shoe Makers Kicked Off the Pitch

Nike and Birkenstock lose ground, a U.S. chipmaker posts excellent results, and China gets creative with older ASML machines.

Investors were optimistic again yesterday, pushing European equities up by an average of 1.1%. Dutch construction groups BAM and Heijmans both gained 4%. Brussels’ Bel20 (+0.2%) lag behind. Healthcare real estate owners Aedifica (+2.4%) and Cofinimmo (+2.7%) performed well, but heavyweight Argenx slipped 2.3%. Outside the index, Floridienne (+5%) and Campine (+6.5%) stood out on the upside, while Agfa-Gevaert (-4.3%) and Nyxoah (-4.4%) were among the main laggards. On Wall Street, both the S&P 500 (+0.8%) and the Nasdaq (+1.4%) closed higher. Micron Technology surged 10.2% to 248.55 dollar after strong results. A Morgan Stanley analyst turned bullish and sees the chipmaker’s share price rising to 350 dollar.

This morning in Asia, Hong Kong’s Hang Seng Index is up 0.7%, while Japan’s Topix is trading 0.8% higher. The Bank of Japan expects inflation in the Land of the Rising Sun to finally move up towards 2%. As expected, the central bank raised its policy rate to 0.75% from 0.5%, the highest interest rate for the yen in more than 30 years. In Liège, Immo Moury is publishing half-year results. In the United States, cruise operator Carnival and frozen fries specialist Lamb Weston are opening their books. On the macroeconomic front, the University of Michigan will release the results of its December survey on U.S. consumer confidence.

Nike’s Shoes Are Pinching

U.S.-based Nike, which also employs many people in the Belgian towns of Ham and Laakdal, saw its quarterly revenue rise 1% to 12.4 billion dollar. That is better than the 12.2 billion dollar analysts had expected. Net profit for the quarter came in at 792 million dollar, also roughly 200 million dollar above forecasts. You would think that would be good news, yet Nike’s share price dropped 10.7% in New York after-hours trading. The sportswear giant is missing key targets in Asia and Latin America. In China, sales fell 17% to 1.4 billion dollar, while revenue in Latin America declined 4% to 1.7 billion dollar. According to the company’s chief executive, a strategic overhaul in China is urgently needed. At the same time, North American import tariffs on footwear and sportswear are weighing on the company’s margins.

And at Birkenstock

Germany’s Birkenstock is also feeling the heavy impact of Donald Trump’s import tariffs. Despite solid revenue growth of 16% to 2.1 billion euro for the full broken financial year, the share price fell 11.3% on the New York Stock Exchange. The sandal maker expects slower revenue growth in the current quarter. For the traditionally strong year-end period, it is forecasting sales growth of 13% to 15% to around 700 million euro. That is well below the 758 million euro analysts had pencilled in. The company manufactures most of its products in Germany and therefore faces a 15% import tax when shipping goods to the United States. As a result, tariffs are also expected to have a negative impact on Birkenstock’s margins.

Did you know…

that China is upgrading older ASML chipmaking machines itself to create additional production capacity for AI chips? Through this kind of bricolage, Chinese engineers are trying to print more and better chips to compete at a global level, even if that is something the United States would rather not see happen.

This article was translated from Dutch and was originally published on Spaarvarkens.be.