Nike Shares Off on Weak Orders, Downgrade

Reuters ^ | Fri June 27, 2003 10:51 AM ET | Reuters

[New Horizon]

NEW YORK (Reuters) - Shares of Nike Inc. NKE.N , the world's largest maker of sports shoes, fell nearly 6 percent on Friday after it reported weak U.S. orders and a major Wall Street brokerage downgraded the stock. The stock was down $3.25 at $53.68 in morning New York Stock Exchange trading.

Merrill Lynch analyst Virginia Genereux downgraded the shares to "neutral" from "buy." In a research note, she said the stock was no longer undervalued and Nike's excess levels of inventory are hindering its growth prospects.

Genereux also said Nike's relationship with top U.S. athletic shoe retailer Foot Locker Inc. FL.N doesn't appear to be improving and may lead to more bad news. The two companies are disputing the number of high-end Nike shoes Foot Locker sells.

Genereux also downgraded Foot Locker's stock to "neutral" from "buy."

Foot Locker shares slid 24 cents to $13.26 on New York Stock Exchange.

After the markets closed on Thursday, Nike reported higher earnings that narrowly missed Wall Street estimates for the fourth quarter ended on May 31.

The company reported a 10 percent decline in U.S. orders for athletic footwear and clothing scheduled for delivery between June and November, while U.S. footwear revenue fell 3 percent for the quarter.

[New Horizon]

My Nike's fell apart in two months.

[mountaineer]

Gee, that would be a real shame if NIKE couldn't recoup the $90 million it spent on Lebron James.

[SamAdams76]

Can somebody explain why Nike sneakers are so popular? Is it that they last longer or are better made than the others? I have always bought New Balance sneakers. They seem to last a long time and are very comfortable to walk and run in.

[New Horizon]

Or the $21 million for Carmelo Anthony.

[New Horizon]

Well, they look cool, I guess. Fact is, they are made like crap. I recently purchased 2 pair of Filas and they feel and wear better than any Nikes I've had.

[jriemer]

I'm surprised that the analysis haven't attributed the drop in share price to the fact that the USSC just allowed the 1st Amendment case against Nike to proceed. This opens them up to a large sack of new court costs and potential civil liability depending on how the case proceeds in the West Coast lower courts.

[nothingnew]

My Nike's fell apart in two months.

Mine lasted 4 months.

I have always bought New Balance sneakers

I do now...I'm a retired printer who flags PT, and my NB sneaks are great.

FMCDH