Nike’s sagging swoosh
Nike shares have lost nearly 18 percent of their value this year and are trading near 52-week lows. It’s a consistently profitable company and one of the world’s top brands, so why is this superstar’s stock sagging?
Increased competition from rival athletic wear companies Adidas and Under Armour and slowing sales are the primary issues that have investors concerned.
A year ago, Nike set a goal of reaching $50 billion in annual sales by 2020. But shortly after the announcement, revenue started to slow. Its most recent quarterly report did little to boost confidence: “futures orders,” a closely watched stat among Nike analysts, were up just 1 percent in North America. That indicates weak demand for the coming seasons.
Analysts remain concerned Nike may not reach its long-term goals. The primary issue seems to be gains by Adidas and Under Armour.
“Nike is a fantastic company,” said Camilo Lyon, an analyst at Canaccord. “However, we believe a significant brand shift is underway that could persist for the next (one to two) years before reversing.” Susquehanna Financial Group analyst Sam Poser is more bullish, saying it’s in “Nike’s DNA to respond skillfully and forcefully when challenged” and that the stock’s weakness is a chance to buy. Data based on fiscal year
Sources: Company earnings reports