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In a note downgrading their rating of the stock to sell, the analysts argued that the company “appeared unprepared” to adjust to the return of in-person shopping after the removal of COVID-19 restrictions and had lost key senior figures that had a “now necessary” historical knowledge of the business.
“As such, Nike’s game today, is not as good as it was 5 years ago,” the analysts said.
They flagged that U.S. inventory levels are elevated, adding that the figure is around $800 million above the “optimum level” as of the close of Nike’s holiday quarter ending on February 28. They also anticipated that North American sales will likely be somewhere between a decline in mid-single digits or a rise in the low-single digits over the next three quarters.
Margins, as a result, are not expected to recover until the second half of fiscal 2024, the analysts said.
