Nike is showing 3 signs it can turn around its sneaker slump (NKE)

business news

  • Nike is showing some signs of progress toward accelerating sales growth and margins, Wedbush Analyst Christopher Svezia says.
  • Svezia believes the company’s financials will improve on the back of less FX pressure, a higher average selling price, and new product releases.
  • Watch Nike’s stock price move in real time here.

While some industry skeptics see the reversal of Nike’s lagging North American sales coming too little, too late, one Wall Street analyst believes it has reached an inflection point and will be seeing more upside in the future.

The sneaker giant has lost market share to rivals like Adidas because it has been slow to pick up on trends and deliver hip products in a timely fashion. However, that is starting to change as the company has begun to roll out new styles, colors, and product lines of its top seller: sneakers.

“Our view is that Nike is poised to accelerate sales and margin growth in FY19, which should ultimately support further multiple and stock price appreciation,” wrote Christopher Svezia, a Wedbush analyst.

Svezia raised his 12-month price target to $74 per share, while maintaining his “Outperform” rating.

He Nike will need to demonstrate a few things in order to support his conclusion.

Though the company is expected to report declining North American sales in the third quarter, its sales growth should improve next quarter by 1% due to the timing of new products and improvements, he said. 

Moreover, Nike’s gross margin — the percent of revenue the company has after factoring in the costs of producing its products — will be propped up by abating FX pressure, a higher average selling price, and a favorable mix of sales coming from direct-to-consumer transactions and distributors, he said. This should turn its gross margins positive for the first time in roughly nine quarters.

The company should also see accelerating sales growth in China and Western Europe as the company ramps up “an improving product engine,” Svezia said.

The analyst said he has high hopes for the company’s new product releases, such as the Epic React, which will formally launch on February 22. Its core colors sold out within a few hours on both Nike’s and Foot Locker’s websites, he noted.

Nike was trading at $66.46 per share, up 4.65% for the year.

Read more about how to take advantage of the ‘rise of sneaker culture.’

 

SEE ALSO: Adidas needs to do one thing ahead of the World Cup to beat the competition

Join the conversation about this story »

NOW WATCH: I quit cable for DirecTV Now and it’s saving me over $1,000 a year — here’s how I did it

Комментариев нет

Добавить комментарий

business news
Bitcoin’s rough patch looks like the Nasdaq during the tech bubble — except it’s moving 15 times faster

Bitcoin fell as much as 70% from its mid-December high through its recent early-February low. The cryptocurrency’s price chart mirrors that of the Nasdaq Composite Index during the dotcom bubble era, but there’s a catch. Historical fluctuations in the Nasdaq should provide a template for how bitcoin will trade going …

business news
‘China is not afraid’: China strikes back at Trump with new tariffs as trade fight escalates

President Donald Trump announced new tariffs on $50 billion worth of Chinese goods on Thursday. Chinese officials strongly condemned the move. “China does not want a trade war with anyone,” said the Chinese Embassy in Washington, DC. “But China is not afraid of and will not recoil from a trade …

business news
Bill Ackman reportedly cashes out of his Nike investment after making about $100 million

Pershing Square CEO Bill Ackman has cashed out his stake in Nike after making about $100 million, according to Dow Jones.  Ackman recently exited a years-long bet in Herbalife that reportedly cost him hundreds of millions of dollars.  The apparel maker is set to report earnings after the market close …