Saturday, 17 December 2016

The Nike Debate Rages On


The stock is already down 18% this year, but the pain might not be over, says one analyst.

Nike is at risk of getting stuffed by the competition, says one analyst.
Nike is at risk of getting stuffed by the competition, says one analyst. PHOTO: GETTY IMAGES
Nike is getting dunked on by its smaller competitor Adidas, an analyst said on Friday.
It’s getting tough to sell Nike shoes, so retailers are shifting shelf space to Adidas, wrote Canaccord Genuity analyst Camilo Lyon.
Nike reports its earnings on Tuesday, and analysts have been in a fierce debate about whether the company is in free-fall, or whether it’s about to rebound. Susquehanna Financial Group analyst Sam Poser weighed in earlier this week with an opposing view, saying that Wall Street is too pessimistic, especially given that the shares are already down 18% this year.
But Lyon is convinced that Nike is in trouble, and that its new sneakers are simply not selling well. In fact, he doesn’t expect Nike to get innovative new products on the shelves until spring 2018. He thinks the company is scrambling now to release more of its limited-edition products like the Jordan 3, some of which are priced above $200. But that could cause “a dilutive effect on the scarcity value of its highly sought-after merchandise,” he said. Or, in layman’s terms, if you make it too easy to buy the hot shoes, they don’t seem so hot anymore.
Investors won’t know the score until Tuesday. Stay tuned.
Big Picture: Analysts are in a fierce debate over whether Nike is on a losing streak, or is about to rebound.

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