Nike shares slipped on Wednesday after it said an important metric was rising at a slower rate than Wall Street forecast, sparking concerns that the group could be facing pressure from tougher competition.
The Oregon-based company said futures orders, seen as a forward-looking indicator of sales, rose 1 per cent in North America, Nike’s biggest unit, as of August 31.
The figure missed expectations of a 5 per cent rise and marks a slowdown from the 6 per cent pace it reported as of May 31.
The news added to worries that competitors such as Under Armour and Adidas may be pressuring the blue-chip maker of athletic apparel.
“With athletics being one of the few spaces in retail that is expanding, more and more players are looking to get into, or expand, (into) athletic apparel and footwear,” said Susan Anderson, an analyst at FBR.
Analysts also said Nike’s decision to exit the golf equipment business could have weighed on its results.
The shares closed down 3.8 per cent at $53.25, deepening the year-to-date loss to 14.8 per cent.
Despite the gloomy performance this year, many analysts continued to strike an upbeat tone.
“We continue to see Nike to be a beneficiary of secular tailwinds from both growing global concern for fitness and increasing casualisation of fashion”, said Jim Duffy, an analyst at Stifel.
Echoing that view, Simeon Siegel at Nomura said that “despite the threat from a push by competition and disappointing futures (orders), we view Nike’s scale and dominance as a long-term barrier to entry”.
Overall, Nike said its sales climbed 8 per cent on a year-on-year basis in the quarter to August 31 to $9.06bn, beating expectations of $8.87bn.
Net profits advanced to $1.25bn, or 73 cents a share, from $1.18bn, or 67 cents a share. That also beat estimates of 56 cents.
Elsewhere, AT&T was also in the red after UBS reduced its rating on the telecommunications group to “neutral” from “buy”.
UBS cut its forecast for earnings per share for 2016, 2017 and 2018 by 3 per cent due to increased competition in the wireless industry, and the costs associated with AT&T’s rollout of the DirecTV Now streaming television service.
The shares fell 1.5 per cent to $40.85, cutting the 12-month rise to 27.9 per cent.
Cintas, the maker of work uniforms, lifted its profit outlook.
The company forecast earnings on continuing operations of $4.55-$4.63 a share in its current fiscal year, from a previous estimate of $4.35-$4.45. The rosier outlook came on the back of what Oppenheimer analyst Scott Schneeberger described as “another solid quarter”.
Its shares rose 2.4 per cent to $116.17.
At the close of trade, the S&P 500 had risen 0.5 per cent to 2,171.4, the Dow Jones Industrial Average gained 0.6 per cent to 18,339.2, and the Nasdaq Composite rose 0.2 per cent to 5,318.6.
Energy shares climbed the most in more than eight months on Wednesday after Opec agreed to the need to cut production for the first time in eight years.
The S&P 500 energy sector advanced 4.3 per cent, buoyed by a rally in crude prices.
Brent crude, the global oil benchmark, rose 5.1 per cent to $48.31, while West Texas Intermediate, the US oil standard, rose 4.5 per cent to $46.67, after the 14-member group reached a consensus that production cuts are needed to support prices and rebalance the market at their informal meeting in Algiers.
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