Market Overview

Nike's Earnings Prove It's Losing Market Share To Under Armour, Adidas

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According to Morgan Stanley's apparel analyst Jay Sole, investors were concerned that Nike Inc (NYSE: NKE) was shedding market share to Under Armour Inc (NYSE: UA) and Adidas.

Speaking as a guest on CNBC, the analyst said these investor concerns have now been confirmed in Nike's first quarter earnings results.

Related Link: Morgan Stanley Calls Nike's Q1 Earnings Beat 'Low Quality,' Sees Guidance As 'Soft'

Sole said the most important action Nike needs to take is to stop Adidas momentum. Specifically, Adidas has "a lot of hot products" in the market, including its Kanye West-inspired Yeezy shoes. In fact, the analyst pointed out that one retailer in Europe said they've seen 5.5 million requests for the Yeezy 350 model, which was just released last weekend.

Sole pointed out that in terms of retail sales, this amounts to $1 billion - and from just one pair of shoes.

"Nike doesn't have anything like that right now," Sole said. "They need to come up with something to slow down the momentum from Adidas."

Sole did acknowledge that Nike still has a robust pipeline of new products, so there is no innovation problem going on at Nike's headquarters.

Bottom line, Sole argued Nike sponsored 189 athletes at the Olympics who won a medal. This should serve as a sign that the company still has "great authenticity" and "credibility" in sports and this is what consumers recognize.

Latest Ratings for NKE

DateFirmActionFromTo
Jul 2020Morgan StanleyMaintainsOverweight
Jun 2020Credit SuisseMaintainsOutperform
Jun 2020JefferiesMaintainsHold

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Posted-In: Adidas Yeezy CNBC Jay SoleAnalyst Color Sports Analyst Ratings Media General

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NKPiper SandlerInitiates Coverage On18.0
BKJefferiesUpgrades45.0
NTRSJefferiesUpgrades95.0
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