Nike shares jump as Ackman's return sparks turnaround hopes
By Ananya Mariam Rajesh
Aug 15 (Reuters) -Nike shares NKE.N gained nearly 4% onThursday as investors hoped the return of billionaire WilliamAckman as a stakeholder could spark a turnaround at thesportswear giant that has beenbattling with strategymissteps and tough competition.
Ackman's hedge fund Pershing Square Capital Management nowowns roughly 3 million shares of Nike, amounting to a stake of about 0.19%, a filing showed on Wednesday. He has not revealed any plans for the investment yet.
"He's going to have the ear of the executives at Nike and be able to lend some influence on maybe how to get the ship righted, as it were, for Nike at this point in time to try and find their way back home," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which owned $25.79 million worth ofNike shares as of June.
Thestock has lost nearly a third of its value this year and the company has forecast a drop in annual sales for fiscal 2025, leading some Wall Street analysts and investors to raise the possibility of a management shake-up including CEO John Donahoe.
When an activist investor comes in, the ultimate goal "willbe replacing the person that sits in the corneroffice," said Art Hogan, chief market strategist at B Riley Wealth.
"And I say that because the template for that has been very clear this week in the form of Starbucks."
Starbucks SBUX.O poached Chipotle CEO Brian Niccol earlier this week, tapping the industry veteran behind the burrito chain's turnaround to revitalize growth at its coffee outlets.
Niccol joining Chipotle in 2018 was also the result of one of Ackman's pressure campaigns that have often led to CEO changes at companies including J.C. Penney and Air Products and Chemicals.
Ackman last invested in Nike in late 2017,around the time when the company was losingmarket share in North America to a reinvigorated Adidas.
Heexited Nike a few months later in 2018, makingroughly $100 million in profit by cashing out of the 0.71% stake - a rarepassive investment for the billionaire investor.
Analystsand investors hinted on Thursday it might be early days for Ackman's second stint as an investor at Nike and he will need to build a largerstake to make an impact.
Nike's forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 24.26, compared with Adidas'36.75.
Reporting by Aishwarya Venugopal, Ananya Mariam Rajesh and Granth Vanaik in Bengaluru; Editing by Devika Syamnath
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