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Nike (NKE) shares stumbled after the company cut sales outlook and announced $2 billion in cost cuts, concerning investors. However, Bernstein analyst Aneesha Sherman maintains her bullish stance, arguing the macro drags don't signal "weakness in the Nike brand" itself but rather overall "tough market" conditions impacting companies across the sector.
In her view, Nike's move to reshape investments towards winning categories like women's and Jordan's aims to help the brand "stay relevant in people's minds" despite rocky conditions. While near-term uncertainty abounds, Sherman believes Nike's will manage the market storm and re-accelerate when headwinds subside.
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Video Transcript
BRAD SMITH: Well, while investors are troubled by the impact of macro headwinds on Nike sales, analysts seem encouraged by the company's shift in attention to margins. Our next guest says that while the timing of the cuts announcement may be questionable, she likes the goal of funding high-growth initiatives. We have Aneesha Sherman, who is the Bernstein senior analyst here with us. Aneesha, great to speak with you as always here.
A lot of people are waking up this morning, especially after the judging that shares took immediately after the earnings release was dropped last night. Plus, the call took place and trying to figure out in an environment where we've heard all week buy on the dip, buy on the dip, buy on the dip, you've got a 10% dip here in Nike. Is it worth owning when you think about the long-term trajectory?
ANEESHA SHERMAN: I think, yes. So the issues that Nike highlighted in its H2 guidance cut, which was the big driver of the market reaction last night after market, they cut guidance from high single digits down to 1% growth, pretty big cut. But the biggest driver of that was macro and we've been hearing about macro weakness across the sector.
We heard it from Under Armor, from Lululemon, from Skechers, from Crocs, from a bunch of brands, you know, that reported over the last month. Nike hasn't reported since September, so they are, kind of, catching up to a trend that others in the sector have pointed out. I don't believe it signals any weakness in the Nike brand relative to competitors. It's just weakness in the market overall.
Seana, you talked about proportionality the weakness of digital. We're seeing all of those impacts on Nike's numbers as well as everybody else's. So I would not read this as a fundamental deceleration of Nike in particular, it's just a tough market. And if you're looking at it out more than six months out, I think this is a good opportunity to get into the stock.