Analysts' average rating on shares is $184.35, according to FactSet. Nike was trading around $149 per share by Friday afternoon. UBS has a $185 price target on shares, with a buy rating. Wall Street research firm UBS said it expects Nike's stock to bounce back from Friday's sell-off. Supply constraints will impact the region's second-quarter performance, he said, but the company will "invest for the long term, and we're confident in the long-term opportunity." But in Nike's latest quarter, revenue in the region grew the slowest of all geographies.Ĭhief Executive John Donahoe said Nike is playing the long game in China. Greater China has long been Nike's most profitable and important growth market. Strengthening Nike's North American business will be even more important if growth in China slows. "The most significant impacts from Vietnam factory closures should happen post-holiday." Another way to shore up growth and are impacting the athletic footwear space broadly," Lejuez said in a research note. "We view these supply chain disruptions as transitory. He doesn't see Nike as having a demand problem. But he added, "Strong brands get stronger in this environment."Īnd according to Citi analyst Paul Lejuez, a temporary supply chain problem is a much better issue to have than a demand problem. "We're going to have lean inventory," he said. Nordstrom's stock was about flat.Ĭhief Financial Officer Matt Friend said temporary supply chain disruptions will "likely trigger an even greater acceleration in the transformation of the marketplace - toward Nike and our most important wholesale partners." On Friday, Foot Locker shares were down more than 6%, while Dick's shares shed nearly 2%. Nike's top partners include Foot Locker, Dick's Sporting Goods and Nordstrom, and investors in these stocks are concerned about what Nike's troubles will mean for their businesses. On Thursday's earnings call, Nike's management team said it is prioritizing its direct channels. It's a no-brainer to take advantage of that." "It's the greatest pent-up demand, because they are basically telling the consumer, 'You can't have it right now.' You're creating FOMO by not having supply. "People are always going to be drawn back to the big brands," she said. Nike still has the demand."Īnd even if Nike's shelves are a bit bare in the coming months compared with normal times, Widlitz said, she doesn't think it will permanently drive shoppers away to other retailers. "This is a major opportunity, because you're seeing all of these other brands cut wholesale, but they don't have the top line like Nike. "This means Nike now gets a free excuse to accelerate its DTC transition and say, 'We don't have the supplies to get to our wholesalers,'" said Stacey Widlitz, president of SW Retail Advisors, in an interview. Over the past three years, Nike has pulled out of about 50% of its wholesale accounts. It has been cutting partnerships with some wholesale retailers, while building its online business and opening Nike stores around the world. "They're prioritizing their own channels with product first."īefore the Covid pandemic struck, Nike was on a path to grow its direct-to-consumer business. "As long as inventory is constrained, it's fair to assume the pivot to direct will be accelerated," BMO Capital Markets analyst Simeon Siegel said. It will likely opt for its own stores, over wholesale partners. This means Nike will need to be much more strategic about where it's stocking running shoes and workout tops. About 43% of its total footwear and apparel units are made in the country.įor the next few quarters, Nike predicts consumer demand will outweigh supply. Manufacturing facilities across Vietnam are beginning to reopen, but Nike has lost about 10 weeks of production due to pandemic shutdowns. It now takes Nike roughly 80 days to get goods from Asia to North America, which is double pre-pandemic transit times. Nike's supply chain struggles are providing it with cover to accelerate its direct-to-consumer strategy, which has been a key driver of profitability in recent quarters. Amid the sell-off some analysts see an opportunity for Nike to position its business - and its stock - for greater growth.
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