Nike shares were downgraded on Sunday, causing them to drag down the Dow Jones Industrial Average on Monday. This comes after a tough week for footwear stocks following disappointing sales estimates in last week’s earnings report. Footlocker also cut several price targets after their own disappointing first-quarter results, causing a surge in their stock. Shoe stocks had a positive start to the year with their first gain in four months.
Williams Trading downgraded Nike’s rating from hold to sell, citing their struggling U.S. business and shaky recovery in China. The downgrade was based on their belief that Nike’s U.S. business will be in a tough spot through at least the first half of fiscal 2024, and that consumers may be trained to look for promotions while Nike lacks compelling new products. Following the downgrade, NKE shares fell 1.7%.
Foot Locker also had its price target cut after failing to reach financial results on Friday. Citigroup downgraded their Florida stocks from buy to neutral and lowered their price target. This was due to an inability to assess the economic sensitivity of Foot Locker’s customer base during a time of sluggish consumer spending, as well as a belief that their management’s plans were disruptive to their business. Williams Trading also decided to sell their stake in Foot Locker after Nike’s downgrade.
Other shoe stocks were affected as well, with Crocs falling 5.5% on Friday and Skechers falling 3.9%. On Holding shares rose slightly before the market on Monday despite expectations of slower sales growth in the second half of the year. For stock news and updates, followers can check Harrison Miller’s Twitter @IBD_Harrison.