MoneyBeat: Nike Leads Sportswear Rebound -- WSJ

By Amrith Ramkumar 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 21, 2018).

Add another company to the list of retailers bouncing back in a big way this year: Nike Inc.

The Beaverton, Ore., firm has led a resurgence in shares of companies that sell athletic equipment, shoes and clothing, after worries about the rapid rise of e-commerce hurt the group in previous years. Nike shares are up 36% this year and closed at a record Thursday after the stock fell from its October 2015 peak through last fall.

Analysts say confidence in Nike's digital sales efforts -- particularly in North America -- has lifted the stock, a trend also seen with traditional brick-and-mortar retailers such as Macy's Inc. this year. Nike's 2018 advance has put it in the upper echelon of the S&P 500, even topping the year-to-date climbs of technology heavyweights like Apple Inc. and Microsoft Corp.

The gains have come despite an investigation into allegations of inappropriate workplace behavior and flaws in Nike's human-resources department, which were reported by The Wall Street Journal earlier this year.

More recently, Nike shares have erased their 3.2% drop from Sept. 4, when the company faced backlash for using National Football League quarterback-turned-activist Colin Kaepernick at the center of an advertising campaign.

Analysts were initially anxious about the impact of the decision on sales, but Wall Street seems to be more confident that Nike can keep growing revenue. Five analysts tracked by FactSet have raised their price targets on the stock in the past week, ahead of Nike's earnings report next Tuesday.

"I thought Nike would have problems with the Kaepernick situation. I was wrong," said Eric Aanes, president and founder of Titus Wealth Management. "Their edgy marketing appeared to pay off for them."

Shares of other sporting-goods companies also have climbed.

Under Armour shares are up 39% this year. In Europe, Adidas has risen 25% for the year and Puma has climbed 16%, outpacing middling stock indexes in the region that have been buffeted by trade tensions and weaker-than-expected economic growth.

Although some analysts expect heavy competition to hurt the group moving forward, others are confident it can keep climbing late in the year.

"We struggle to find much negative to say on sporting goods," HSBC analysts said in a recent note to clients.

To receive our Markets newsletter every morning in your inbox, click here.

Write to Amrith Ramkumar at [e-mail]

(END) Dow Jones Newswires

September 21, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.