Bank of America Downgrades Nike on Delayed Sales Recovery

Nike's comeback is running behind schedule according to Bank of America, which downgraded Nike from Neutral to Underperform and lowered its price objective to $30. The bank believes that Nike's sales recovery will arrive a fiscal year later than expected, with revenue forecast to decline through the year ahead.

The recent bright spot for Nike, North America wholesale, is likely to slow as sell-through lags behind sell-in. This gap may leave retailers less willing to back new product, exacerbating inventory issues built up by soft demand in China. The bank's team pointed out that weak sports demand in China and poor product innovation are also contributing factors.

Nike's earnings outlook now depends on gross margin expansion and cost control, according to Bank of America. The incoming chief financial officer is expected to focus on reducing operating overhead, which could help carry Nike's earnings story forward.