Wall Street Breakfast Podcast: Nike Rallies As New CEO Boosts Hopes
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Nike (NKE) faces challenges even as a new CEO brightens the spirits of investors. (00:26) Warren Buffett’s Berkshire (BRK.B) continues to trim Bank of America (BAC) stake. (01:55) Macy’s (M) to hire fewer employees for holiday season this year. (02:39)
This is an abridged transcript of the podcast.
Nike (NYSE:NKE) turned some heads on Thursday by announcing that CEO John Donahoe will step down to be replaced by Elliott Hill.
Hill, who is a long-term Nike veteran who retired in 2020, held senior leadership positions across Europe and North America during his tenure with the company. According to Nike, he was responsible for helping grow the business to more than $39 billion.
Morgan Stanley’s read on the management move was that it was not surprising in light of recent profit volatility, guidance shortcomings, and a lack of strategic long-term clarity. The firm now thinks a full-year guidance cut is likely when Nike (NKE) reports FQ1 earnings on October 1. Analyst Alex Straton said it is unclear if Nike (NKE) will still hold its investor day event on November 19, with Hill not taking over the CEO position until October 13.
Jefferies also welcomed the news of the return of Elliot Hill to Nike (NKE) and noted that investors are confident in his leadership. “However, Hill faces challenges after his four-year absence, including rising competition and changes in distribution, brand building, and product,” warned analyst Randal Konik. The view from Jefferies is that Nike (NKE) shares could be range-bound until there are more concrete plans on how to spark growth.
Nike (NKE) is up 7% in premarket action.
Over the last 52 weeks, Nike’s (NKE) share price return has trailed the returns of Adidas (OTCQX:ADDYY) and Under Armour (UAA) by a wide margin, although Nike has outperformed Lululemon (LULU) over that period.
Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) has shed more Bank of America (NYSE:BAC) stock, selling shares worth about $900M bringing its stake down to 10.8%.
Berkshire (BRK.B) sold 22.3M BofA (BAC) shares on Tuesday, Wednesday and Thursday at prices ranging from $39.50 to $41.05 apiece.
The investment giant now holds 835.9M shares in the bank. If its stake falls below 10%, Berkshire (BRK.B) won’t be required to disclose BAC stock sales within two business days.
Berkshire (BRK.B) has sold around $8B of BofA (BAC) shares, or close to 20% of its stake, since mid-July.
Macy’s (NYSE:M) announced plans to hire over 31,500 full-time and part-time employees for the upcoming holiday season, a decrease from ~38,000 workers hired last year and ~41,000 in 2022.
The decision reflects broader trends in the retail sector, where U.S. retailers are expected to recruit fewer seasonal employees due to a softer labor market and cautious consumer spending as shopping season approaches.
A forecast report indicated that U.S. holiday sales will grow at the slowest pace in six years, owing to inflation and reduced consumer savings. The Deloitte report predicted mild sales growth of 2.3% to 3.3% vs. last year.
Macy’s (M) gets a Seeking Alpha quant rating of Hold, with the lowest factor grades given to growth.
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Disney to stop using Slack as its corporate messaging platform – WSJ
Catalyst watch:
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The stock market could see extra volatility with triple witching day featuring the simultaneous expiration of stock options, stock index futures, and stock index options contracts.
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ZEEKR (ZK) will officially launch the Zeekr 7X SUV. It has a starting price of 239,000 yuan ($33,680) and is aimed at competing with the Tesla (TSLA) Model Y.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. Crude oil is down 0.1% at $71/barrel. Bitcoin is up 2% at $63,000.
In the world markets, the FTSE 100 is down 0.8% and the DAX is down 1%.
The biggest movers for the day premarket: FedEx (FDX) is down 13% after the company reported weaker-than-expected FQ1 profit and sales and revised down the FY2025 outlook.
On today’s economic calendar: