Nike's Turnaround Prospects Under Scrutiny as Sales Warning Hits Stock
Nike's latest sales warning has analysts divided on whether its turnaround efforts are bearing fruit. The company forecasted a high-single-digit sales decline in fiscal 2027, sending shares down 5.6% after missing revenue targets in its first-quarter report.
The news comes as Nike announced plans to conduct layoffs next year, which added to the pressure on the stock. Since the start of the year, Nike's value has plummeted by over half, and the launch of Caitlin Clark's new shoe sold out in just over an hour, failing to boost investor sentiment.
Nike's guidance for fiscal 2027 earnings per share is well below consensus at $1.15 to $1.35, with Sportswear, Jordan Brand, and Greater China sales expected to remain under pressure through fiscal 2028. The company's $2.5 billion gross cost savings program through fiscal 2031 aims to address these challenges.
Analysts are mixed in their views on Nike's turnaround prospects. Bank of America reiterated its Underperform rating, while UBS trimmed its EPS estimates by 4% to 6%. However, Jefferies was more optimistic, stating that the quarter showed progress in the company's turnaround efforts.