Nike released lackluster sales forecasts, and some of Wall Street’s biggest shops reduced inventory. The sportswear company reported better-than-expected third-quarter results on Tuesday, but its stock fell nearly 11% on a bleaker-than-expected sales outlook. Nike said it expects sales to decline 2% to 4% in its fiscal fourth quarter as its new corporate strategy does not immediately improve demand for its products in various markets. That forecast was well below Wall Street’s consensus estimate of a 1.9% increase, according to LSEG data. The apparel giant also expected sales to decline by low single digits for the remainder of the calendar year, driven by growth in North America and offset by declines in China, a forecast that beat public expectations. NKE YTD Mountain NKE Year-to-date “We had expected growth to return in the first quarter of 2027 due to better-performing product innovations and wraparound Win Now activities, but instead management has initiated guidance for sales to remain negative through the third quarter of 2027,” Bank of America analyst Lorraine Hutchinson said in a note to clients on Wednesday. “While strong results from Running and NA were the reason for our patience, we lowered our rating to Neutral as we believe there is little room for multiple expansion with the sales tipping point looming nine months away.” Bank of America downgraded Nike’s rating from “Buy” to “Neutral.” It also lowered its price target to $55 from $73, suggesting an upside of about 4% from Tuesday’s closing price. The bank also lowered its earnings per share forecast for the stock. In late 2024, CEO Elliot Hill announced a “Win Now” roadmap to turn around Nike’s sluggish sales and stagnant brand momentum. The plan called for Nike to strike new deals with wholesalers, advance innovation in sports performance and expand into key categories such as running and basketball. But the plan has taken longer to materialize than some investors had expected, contributing to the market’s bearish mood. Goldman Sachs also lowered its rating on the stock from “buy” to “neutral” and lowered its price target from $76 to $52. Analyst Brooke Roach said: “Sportswear momentum remains weak, franchise management and inventory reset efforts continue, and EMEA and China remain under particular pressure. We believe NKE will need more patience to execute on its strategic plan as macro headwinds increase.” JPMorgan echoed the negative sentiment surrounding Nike’s turnaround. “NKE is beginning to realize early green shoots for its sports offense strategy in North America and the running category, but its portfolio includes international regions (EMEA, Greater China, APLA),” analyst Matthew Boss said in a client note Wednesday. “The balance of the market continues to work to reset the market, and sell-through outcomes continue to be a challenge globally, resulting in an extended timeline for this model to reach the revenue growth inflection point and return to double-digit operating margins.” JP Morgan downgraded the stock from overweight to neutral. Nike stock has fallen 17% since the beginning of the year, underperforming the broader market.
