NIKE: NO CUT IN OUTPUT
NEW YORK — A Nike spokesman termed as “inaccurate” a report by Smith Barney Inc. that the athletic footwear and apparel company had cut upcoming footwear production from previously specified levels.
The Smith Barney report by analyst Faye Landes emerged on Monday and had immediate impact. Nike’s stock on the New York Stock Exchange Monday dropped 4 1/4 points to 54 7/8 and on Tuesday eased another 1/8. On Wednesday, the stock closed at 56 1/2, up 1 3/4. Landes said that during a visit to Hong Kong and Southern China, she learned that Nike has been lowering its forecasts to its plants.
The Nike spokesman said that the cutback was not on production, but rather on excess capacity. Nike, he said, has always booked excess capacity at manufacturing operations to handle possible upturns in business. Then, in the event that orders turn out to be greater than anticipated, Nike can take them on, he said.
This time around, numbers were consistent with original estimates, nullifying the need for the excess. Therefore, Nike brought production back to normal. It did not, the spokesman stressed, cut back production.
The spokesman emphasized that Nike is a “vibrant, healthy company in a vibrant and healthy industry.” Business remains strong, orders are in line with initial capacity estimates and Nike sees continued growth ahead, with no indication that growth will slow, he added.
While basing her downgrade on the Nike stock to “neutral” from “outperform” on the footwear production, Landes pointed out that Nike’s apparel business “remains quite strong.”