Nike forecast cut rattles sportswear stocks as spending stumbles By Reuters

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<span>© Reuters. FILE PHOTO: The Nike swoosh logo is pictured on a store in New York City, New York, U.S., September 4, 2018. REUTERS/Carlo Allegri/File Photo</span><br />
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<p>(Reuters) -Nike sank 12% premarket on Friday and dragged shares of other sportswear companies after weak consumer spending forced the Air Jordan 1 shoe maker to cut its annual revenue forecast and signal a profit-over-sales strategy shift. </p>
<p>The company also laid out a $2 billion cost-saving plan on Thursday and said it was adopting a “more prudent approach” to planning for the rest of the year, blaming the forecast cut on weakness in its online business and increased promotions.</p>
<p>That sent shares of rivals Adidas (OTC:) and Puma down roughly 5% each, with Lululemon (NASDAQ:) down 2% and Under Armour (NYSE:) down about 6% before the bell.</p>
<p>“This ‘margins before sales’ theme is not new across the entire U.S. retail and wholesale sectors. As companies clean up inventory in a tough macro backdrop, it has been the norm to guide for a weaker top-line offset by stronger margins and cost-cutting,” Barclays analyst Adrienne Yih said in a note.</p>
<p>Some analysts said <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Nike </span></span> (NYSE:) could also be falling behind on innovation and losing share to other brands such as Lululemon and Deckers Outdoor (NYSE:)’s Hoka.</p>
<p>“Nike needs increased and improved marketing investments while HOKA, On and Lululemon are scaling further with increased customer acquisition and retention,” TD Cowen analysts said after downgrading the stock to “market perform” from “outperform”.</p>
<p>Nike also unveiled plans to simplify its product assortment, increase automation, and launch fresher styles to attract consumers.</p>
<p>“While we think this (cost saving plan) is a positive shift, it will take time to scale newness and innovation, and a soft macro will further pressure results in the meantime,” Piper Sandler’s Abbie Zvejnieks said. The brokerage cut its price target to $107 from $112.</p>
<p>Nike’s forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 30.01, compared with Adidas’ 44.48.</p>
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<br /><a href="https://www.investing.com/news/stock-market-news/nike-shares-falter-as-weak-consumer-spending-prompts-forecast-cut-3262146">Source link </a></p><p>The post <a href="https://forextraderhub.com/nike-forecast-cut-rattles-sportswear-stocks-as-spending-stumbles-by-reuters.html">Nike forecast cut rattles sportswear stocks as spending stumbles By Reuters</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>