The athletic apparel industry may be in for another challenging back-to-school season.
Bank of America analyst Robert Ohmes said in a Tuesday note he remains cautious on Foot Locker, Inc. (NYSE: FL), Hibbett Sports, Inc. (NASDAQ: HIBB), Nike Inc (NYSE: NKE) and Adidas AG (ADR) (OTC: ADDYY) due to web traffic momentum that's slowing on a year-over-year basis.
Nike web traffic declined 1 percent year-over-year, while Foot Locker web traffic declined 23 percent year-over-year, according to April comScore data, the analyst said in a note. (See his track record here.)
VF Corp (NYSE: VFC)'s Vans.com and Hibbett Sports saw the biggest web traffic increase, with 38 and 28 percent year-over-year gains, respectively.
Momentum is favoring value-oriented retailers, helped by the introduction of Nike Air Max into the channel with the Air Max Motion 2 and Air Max Axis models, Ohmes said. Nike’s top-selling style, the Air Force 1, is widely distributed across sporting goods and specialty retailers, he said.
The recently launched Nike Air Max 270 may also be overdistributed, the analyst said.
Bank of America continues to see EBIT margin headwinds from the shift to digital for both brands and retailers in light of higher freight costs and and rising costs to drive incremental e-commerce traffic.
The industry saw two negative reactions to notable earnings releases Wednesday.
Dicks Sporting Goods Inc (NYSE: DKS) were down 5.87 percent at the close despite the retailer reporting a first-quarter earnings and sales beat.
Canada Goose Holdings Inc (NYSE: GOOS) also got cooked, with shares down 30.82 percent at the close after the winter wear manufacturer reported worse-than-expected fourth-quarter sales. The company also said it expects slower sales growth in 2020.
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Baird Remains Confident In Nike, Prefers Foot Locker
Photo courtesy of Nike.
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