Analysts Look At Nike'S Performance In The North American Market

In June 29th,

The company will release its performance in the fourth quarter of fiscal year 2016, but the latest earnings forecast seems unoptimistic.

Recently, analysts gave Nike a bearish tone.

Meanwhile, in the past two months, at least four brokerages have downgraded Nike's stock.

Analysts worry that the market will be more competitive and the United States will be more competitive.

The impact of the market downturn is doubtful whether Nike's North American business will continue to achieve sales growth.

According to the data provided by the research system, analysts expect Nike's profit to decline to 831 million US dollars from the US $865 million in the same period last year to the end of the fourth quarter of May, and business income is expected to increase to US $8 billion 300 million from 7 billion 800 million US dollars in the same period last year.

In addition, Wall Street predicts that in the quarter, Nike will earn about $8 billion 270 million in revenue with a profit of 48 cents per share.

Morgan's Morgan Stanley and Cowen & Co. report shows that the main reason why Nike is facing the test is that the US sports apparel market is still in the doldrums under the increasing stock of products.

Morgan Stanley analyst Jay Sole said the US sportswear industry is weakening due to the drag on the strength of the US dollar.

So far this year, Nike's share price has fallen by 16%, but its stock does not fully reflect the risk of slowdown in US apparel sales.

As a result, Morgan Stanley lowered Nike's stock rating to "neutral" at the beginning of this month.

Meanwhile, Morgan Stanley also lowered the target price of Nike to US $9 to US $60.

In addition to the overall weakness of the American sports apparel industry, Morgan Stanley analyst Jay Sole also points out another challenge Nike faces is the increased competition in the American basketball market.

In 2016, the performance of sports brand Under Armour still maintained high growth. The results showed that the company's income in the first quarter of 2016 was $1 billion 50 million, an increase of 30% over the same period last year.

Up to now, Under Armour has seized up to 8% of the market share of North American basketball shoes from Nike, which is mainly due to the signature of the brand's NBA star Stephen Currie.

Widely welcomed by the market.

Faced with the fierce competition in the US basketball market, Nike has made a series of adjustments to management.

Among them, Michael Jackson, the general manager of the global basketball category division, has been replaced by the veteran Craig Zanon, who has been in office for 27 years, in charge of the brand's global basketball business.

One good news is that the Cleveland Cavaliers, led by Nike's star Lebron James, defeated the Jinzhou warriors and just won the NBA championship this season, which is of great significance to Nike's basketball business.

CNBC commentator Jim Cramer said that the sales of basketball shoes increased by 2% on the second day of the victory of the Cavaliers. The victory of the finals will help Nike solve some difficulties in the field of basketball shoes.

For the upcoming earnings report, investment banking analysts in the US wrote in a report: "a greater focus should be placed on Nike's management of the outlook for the 2017 fiscal year, especially how to deal with the worries brought by more intense market competition, the pressure of high-end basketball market, potential financial futures risks and stock pressure in North America."

In fact, before the announcement of the last quarter's quarterly report, a number of brokerages also lowered their stock ratings on Nike.

Finally, Nike's earnings report showed that its sales revenue increased by 7.6% to 8 billion 30 million dollars, less than Wall Street's expected $8 billion 200 million. Since 2005, Nike's real profit growth has only been three times less than market expectations.

As a result, after the quarterly announcement, Nike's share price fell 3% in after hours trading.

But what's worth celebrating is that the sales growth of the sports giant in the Greater China region increased by 27% to 982 million dollars after a sharp increase of 30% in the first quarter and a further increase of 24% in the second quarter.

In view of this, although analysts are "watching" Nike's performance in the North American market, its sales figures in Greater China are still worth looking forward to.