After Nike's announcement that it will form a division
to focus on women's apparel (see THE DAILY, 8/22) and
footwear, "investors were focusing on selling" Nike stock,
according to CNBC's Darby Mullany, who reported Wall Street
"drove Nike down some 10% after J.P. Morgan lowered its
growth estimates for the company." But analyst Noelle
Grainger said that her "more cautious outlook had nothing to
do with [yesterday's] announcement from Nike, but rather
with a meeting with the Nike management. She lowered her
second-half U.S. footwear sales growth estimate to 6% from
8.5%, and she said the result could be near term pressure on
shares given the stock's 33% depreciation since late June."
Banc of America Montgomery analyst Susan Silverstein:
"There's been a little bit of commentary that Nike's U.S.
business is choppy, which by the way, is absolutely not any
new news, and is expected. Maybe there's been a little bit
of shakiness for Nike ... relative to other consumer stocks
which have underperformed in the last few weeks." But
Goldman Sachs analyst Margaret Mager "applauded" Nike's
initiative to create a women's apparel division. Mager:
"The stock should appreciate in line with the earnings
growth. So we think that it is very possible that we could
see Nike stock [which closed yesterday at $42.13] headed to
the low 50s by the end of this year." Mullany cited a Nike
spokesperson as saying that "the company had not changed its
outlook since its fiscal fourth quarter conference call on
June 30th" (CNBC, 8/22). Nike exec Clare Hamill, who will
head the new division, has "no set sales target" but said
that the company "should at least double its" 3% share of
the women's sports apparel market "right away. On paper,
there doesn't seem to be any reason why the women's apparel
business can't be as big as the men's apparel business [some
day]" (Portland OREGONIAN, 8/23).
MORE WALL STREET REAX: First Security Van Kasper
analyst John Shanley said that while Nike has 34% of the $5B
U.S. women's athletic footwear market, the new unit "may
help it increase that market share to as much as" 55%, the
"same percentage it holds in the men's athletic-shoe market"
(BLOOMBERG, 8/22). The Street.com's Tim Arango wrote that
investors "cringed at the news" of the women's division
(Street.com, 8/22). In N.Y., Judith Schoolman writes Wall
Street "reacted coolly" to news of the new division,
"perhaps concerned about the costs of developing new
products and promotion (N.Y. DAILY NEWS, 8/23).
