Key Takeaways
- Nike is unlikely to achieve a turnaround until 2026, Morgan Stanley said in a note published Thursday.
- If the shoe and retail giant pulls off a revival, New Balance, Asics and Lululemon could suffer, the analysts said.
- These brands have gained market share while Nike stumbled in recent years, the analysts said.
New Balance, Asics and Lululemon ought to be on their toes, according to Morgan Stanley analysts eying the possibility of Nike returning to happier days.
Nike (NKE) is unlikely to pull off a turnaround until 2026, Morgan Stanley said in a note published ahead of Nike’s scheduled earnings release Thursday afternoon. (The results will be its second under a new CEO.) But its recovery could pose problems for New Balance, Asics and Lululemon (LULU) because they “enjoyed disproportionate gains from [Nike’s] mis-steps” over the past five years, the analysts said.
New Balance is most at risk because it has gained market share and momentum in online search as Nike stumbled in recent years, the analysts said. Still, New Balance may not compete as directly with Nike since it focuses more on lifestyle footwear than athletic shoes, they added.
Asics has had revenue growth in recent years and sells comparable products, the analysts said. (Asics, which trades over-the-counter in the US, has its primary listing in Japan. New Balance isn’t publicly traded.)
“The brand’s similar focus areas to [Nike]—with both looking to expand wholesale & specialty running category share—poses a risk, particularly if [Nike] successfully launches high-end product,” Morgan Stanley said.
Lululemon’s recent market share and revenue gains also make it vulnerable, according to Morgan Stanley. Nike is launching an apparel line with reality TV star Kim Kardashian and attempting to draw in women who may buy Lululemon, the analysts said.