economy
Wall Street loses patience with Nike as turnaround drags, China weakness deepens
Nike warned that its turnaround is taking longer than it expected, leading three Wall Street banks to downgrade the stock as investors lose patience.
TL;DR
- Nike reported fiscal third-quarter earnings indicating its recovery is not on track.
- Shares fell more than 15% after finance chief Matt Friend warned of low single-digit sales declines through year-end.
- A projected 20% drop in China sales is expected to offset growth in North America.
- Efforts to fix Nike's China assortment are expected to drag on revenue through fiscal 2027.
- Gross margins have declined for seven consecutive quarters, with potential input cost increases from Middle East conflict.
- Three major banks (Goldman Sachs, JPMorgan, Bank of America) downgraded Nike's stock.
- Executives, including CEO Elliott Hill, acknowledged the recovery is taking longer than expected but expressed confidence in a return to growth.