BUZZ - Brokerage Opinion: Nike’s ‘Just Do It’ Mission Is More Challenging Than Expected

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October 2 - ** As Nike NKE.N faces mounting challenges in the Chinese market, the company, under the leadership of CEO Elliott Hill, is further advancing its restructuring effort (link). Previously, the sports apparel giant predicted an unexpectedly sharp decline in annual revenue, and subsequently announced a plan to cut more staff and reorganize its global business units.

** Pre-market shares fell nearly 10%, to $31.63

Challenging Road Ahead

** Morgan Stanley (rating: “underweight”, target price: $27) said Nike must leverage the advantages of the World Cup and high-performance product lines; slower-than-expected wholesale sales trends may persist, leading to inventory buildup larger than management’s order forecast

** Royal Bank of Canada Capital Markets (“sector perform”, target price: $40) noted that “the situation will get worse before it gets better”, adding management stated the impact of streamlining measures will last until FY 2028, while issues with Jordan, sportswear, and Greater China appear even more severe than anticipated

** Bernstein (“outperform”, target price: $45) stated that any broader positive news could trigger a slight rebound, but with a weak outlook for FY 2027, uncertain prospects thereafter, and soft demand for sportswear, investor interest may remain subdued until the company’s strategy and long-term growth outlook become clearer

** Oppenheimer (“outperform”) said the firm remains concerned that Nike (NKE)’s successful repositioning will take time, and could be accompanied by further “growing pains” in the short term

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