Nike dragged down fellow apparel makers and retailers Friday, after the Dow Jones athletic apparel icon announced a "softer" sales outlook amid weaker "consumer demand" late Thursday.
TD Cowen downgraded NKE to a "market perform" rating, down from "outperform." The firm also lowered its price to 104, from 129, as it believes Nike needs increased and improved marketing investments while retail stocks NKE shares sank 11.8% Friday during market action. Several Wall Street cut price targets on the Dow Jones component.
Specialty footwear stocks Deckers , On Holding, Crocs were significant premarket losers, along with Foot Locker and Dick's Sporting Goods. Yoga apparel maker Lululemon Athletica.
DECK stock and Crocs sank 1.4% and 4%, respectively. Meanwhile ONON stock slumped 3.6%. Foot Locker, a key Nike partner, plunged 4%, while Dick's gave up 2.8%. LULU stock pared losses, edging down 0.2%.
Even young adult apparel retailer Abercrombie & Fitch lost 0.7%.
The declines in consumer stocks Friday come amid anticipation of lower demand and softening sales after Nike's fiscal second-quarter earnings and revenue report Thursday.
Nike Stock: A Warning Signal To Retail Stocks
The Dow Jones retailer reported Thursday that fiscal Q2 revenue increased nearly 1% to $13.39 billion. Earnings grew 21% to $1.03 a share. Ahead of earnings, analysts predicted Nike profit of 84 cents with revenue coming in at $13.39 billion. Gross margin swelled by 140 basis points to 44.6%, above consensus of 43.9%.
However, Nike executives also revised full-year guidance on the Q2 earnings call Thursday evening, expecting fiscal 2024 revenue up just 1%.
Nike's forecast of nearly flat sales growth is based on "increased macro headwinds," particularly in Greater China and other international markets. NKE added that digital traffic softness and a stronger U.S. dollar has "negatively impacted second half reported revenue versus 90 days ago."
Nike also signaled weaker "consumer demand over the holiday season."
The Dow Jones giant said it is looking to deliver up to $2 billion in cost savings through 2026. Nike outlined Thursday possibly simplifying its products, increasing automation and use of technology, streamlining the organization and leveraging its scale to drive efficiencies as possible cost saving areas.
Nike is "taking steps to streamline the organization." It expects pretax restructuring charges of approximately $400 million-$450 million in the current fiscal Q3, primarily from employee severance costs.
The Dow Jones stock has an 88 Composite Rating out of a best-possible 99. Nike stock also has a 79 Relative Strength Rating and a 60 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
YOU MAY ALSO LIKE:
Is Tesla Stock A Buy Or A Sell?
Learning How To Pick Great Stocks? Read Investor's Corner
Is Rivian A Buy Right Now After The Cybertruck Delivery Event?
Two Magnificent 7 Stocks Forge Buy Points In Can't Stop Market Rally
