Nike Faces Increasing Competition From Adidas, Under Armour

Nike is facing increasing competition from adidas and Under Armour and may project a slowdown in goods to be delivered to retailers in its earnings next week, according to Canaccord Genuity.

“Our concerns on NKE are mounting,” consumer analyst Camilo Lyon said in a note on Friday. “Our retailing checks coupled with discussions with our industry contacts point to adidas and UA continuing to gain share at NKE’s expense.”

Nike, which will report fiscal Q1 results on Sept. 27, may show a 5.6% deceleration in global constant currency futures, said Lyon who lowered his price target on the athletics retailer to $52 from $56, while retaining a hold rating.

Adidas has broad-based strength across a number of categories and Under Armour “continues to chip away” at Nike’s dominance in basketball, the analyst said.

Other factors weighing on Nike’s prospects include a “lack of exciting new product to warrant increased shelf space allocation,” Lyon said, along with inventory building in China and Western Europe and a slowdown in orders after the Olympics.

While the company will likely top analysts’ consensus on earnings per share in next week’s report after it issued “highly conservative guidance” in the prior quarter, Canaccord cut its expectations for 2017 sales growth and EPS to 6% and $2.32, respectively from 7.9% and $2.38 a share.

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