BMO Analyst Cites Slowing Lifestyle Demand, Weak Demand in Downgrade of NKE and LULU
BMO Capital analyst Kelly Crago has initiated coverage of Nike (NKE) stock with an Underperform rating, predicting that CEO Elliott Hill will face significant challenges in turning around the company. The analyst cites slowing lifestyle demand and lower margins as major headwinds for Nike.
Crago also initiated coverage of Lululemon (LULU) stock with an Underperform rating, noting that the athletic apparel company is struggling with weak demand across both the Americas and China. The analyst expects new CEO Heidi O'Neill to face a difficult task in resetting the business.
Nike's challenges include a China distribution reset, lower margins, and rising competition in the active lifestyle category, according to Crago. The analyst predicts that Nike's FY27 North America sales will fall 5.5%, even though Wall Street's consensus reflects growth.