Bernstein provided insights into SKU counts, pricing, sell-through rates, markdowns, and brand popularity across key franchises. The firm remains optimistic about Nike (NYSE:NKE)'s normalization and brand momentum in FY26.
However, due to the slow pace of inventory clearance for the Air Force 1 and Dunk, there is an expectation that the impact may extend into the first half of FY26, leading to a slight reduction in the forecast for FY26 margins. Despite this, the price target remains set at $109. With Nike's earnings report due on December 19, investors seeking deeper insights can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health, valuation metrics, and growth prospects.
With Nike's earnings report due on December 19, investors seeking deeper insights can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health, valuation metrics, and growth prospects. The new Pegasus models, which were launched throughout the Summer/Fall and will continue into 2025, replaced all older versions discontinued in Spring 2024.
Management is actively managing the product lifecycle, especially within Nike's three largest franchises: Jordan, Dunk, and Air Force 1. This strategy includes discounting and clearing out older inventory while introducing new iterations to stimulate consumer interest. Elliott Hill's appointment as Nike's CEO in October is seen as a continuation of the company's turnaround efforts.
Nike intensified its inventory clearance in November, offering higher markdowns throughout the month, which were particularly noticeable during the Black Friday sales event. While this inventory management strategy impacts margins, Nike maintains a healthy gross profit margin of 45% and sufficient cash flows to cover its obligations, as revealed by InvestingPro's financial analysis.
The Pegasus line is performing well, and the Jordan brand appears to be moving past the peak of its clearance phase with new limited-edition launches planned. However, the Air Force 1 and Dunk lines are still in the process of clearing out dated inventory.
Bernstein provided insights into SKU counts, pricing, sell-through rates, markdowns, and brand popularity across key franchises. The firm remains optimistic about Nike's normalization and brand momentum in FY26. However, due to the slow pace of inventory clearance for the Air Force 1 and Dunk, there is an expectation that the impact may extend into the first half of FY26, leading to a slight reduction in the forecast for FY26 margins.
Despite this, the price target remains set at $109.
In other recent news, Nike has experienced some significant developments. The company's revenue has declined by 2.83% over the last twelve months, according to Deutsche Bank (ETR:DBKGn) and InvestingPro data. Deutsche Bank adjusted its price target for Nike shares, reducing it from $92 to $82, while maintaining a Buy rating. The bank also revised its earnings per share (EPS) forecasts for Nike, reducing them by 7% for fiscal year 2025 and by 11% for fiscal year 2026.
Analyst firms Telsey Advisory Group and Evercore ISI also lowered their price targets and EPS estimates for Nike, citing the need for new CEO Elliott Hill to address the brand's underperformance. Despite these adjustments, both firms maintain an Outperform rating on the sportswear giant.
Raymond (NS:RYMD) James maintained its Market Perform rating on Nike shares, reflecting concerns over the company's recent performance and near-term growth prospects. Morgan Stanley (NYSE:MS) also maintained an Equalweight rating with a revised price target of $80.00, highlighting the company's current challenges.
Nike has also extended its partnership with the National Football League for another 10 years, aiming to expand football's global reach and enhance player safety. Furthermore, the company announced an 8% increase in its quarterly cash dividend, marking the 23rd consecutive year of such increases.
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