Nike seen on track for long-run growth despite tough competition
(Reuters) - Nike Inc (NKE.N: Quote), the world's No. 1 footwear maker, will continue to dominate the sportswear market despite intensifying competition in North America, analysts said on Wednesday, a day after the company reported "futures orders" below estimates.
Nike's futures ordering program allows retailers to order five or six months in advance of delivery, with the commitment delivery will be made within a set time at a fixed price.
Nike said on Tuesday its global orders for September through January were up 7 percent on a constant-currency basis, missing the 8 percent increase analysts had expected.
"Despite the threat from a push by competition and disappointing futures, we view Nike's scale and dominance as a long-term barrier to entry and maintain our 'buy' despite what appears a nascent share loss," Nomura Securities analyst Simeon Siegel wrote in a client note.
Analysts also noted that Nike's futures orders for all regions except North America had met or beaten estimates.
Nike shares were set to open about 1.2 percent lower at $54.68 on Wednesday, even though the company's quarterly revenue and profit beat Wall Street estimates.
The shares fell as much as 5 percent in after-hours trading on Tuesday after the release of the results.
At least eight brokerages cut their price targets on the company's stock, with FBR Securities reducing the most, by $8 to $55. The median price target is $63.
Nike's rivals are chipping away at its decades-long dominant position in sports shoes - Under Armour Inc (UA.N: Quote) with its popular Stephen Curry line of basketball shoes and Adidas (ADSGn.DE: Quote) with retro sneakers such as the Stan Smith line. Continued...