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Nike Shares Jump as Ackman’s Return Sparks Turnaround Hopes

The logo of Dow Jones Industrial Average stock market index listed company Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. (Reuters)
The logo of Dow Jones Industrial Average stock market index listed company Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. (Reuters)
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Nike Shares Jump as Ackman’s Return Sparks Turnaround Hopes

The logo of Dow Jones Industrial Average stock market index listed company Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. (Reuters)
The logo of Dow Jones Industrial Average stock market index listed company Nike (NKE) is seen in Los Angeles, California, United States, April 12, 2016. (Reuters)

Nike shares gained nearly 4% on Thursday as investors hoped the return of billionaire William Ackman as a stakeholder could spark a turnaround at the sportswear giant that has been battling with strategy missteps and tough competition.

Ackman's hedge fund Pershing Square Capital Management now owns 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 of Nike shares as of June.

The stock 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 "will be replacing the person that sits in the corner office," 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 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 losing market share in North America to a reinvigorated Adidas.

He exited Nike a few months later in 2018, making roughly $100 million in profit by cashing out of the 0.71% stake - a rare passive investment for the billionaire investor.

Analysts and 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 larger stake 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.

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Fashion

Sources: Shein Weighs Sale of Less Than 10% of Company in London IPO

A mannequin with a Shein sign stands in an office of a lingerie maker at WeMet Industrial Park, in Guanyun county of Lianyungang, Jiangsu province, China November 25, 2024. REUTERS/Florence Lo
A mannequin with a Shein sign stands in an office of a lingerie maker at WeMet Industrial Park, in Guanyun county of Lianyungang, Jiangsu province, China November 25, 2024. REUTERS/Florence Lo
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Sources: Shein Weighs Sale of Less Than 10% of Company in London IPO

A mannequin with a Shein sign stands in an office of a lingerie maker at WeMet Industrial Park, in Guanyun county of Lianyungang, Jiangsu province, China November 25, 2024. REUTERS/Florence Lo
A mannequin with a Shein sign stands in an office of a lingerie maker at WeMet Industrial Park, in Guanyun county of Lianyungang, Jiangsu province, China November 25, 2024. REUTERS/Florence Lo

Fast fashion retailer Shein is considering asking UK regulators to waive listing rules that require at least 10% of its shares to be sold to the public in its planned London flotation, two people with knowledge of the matter said.
The company is exploring this option to facilitate its IPO, one of the people said, according to Reuters.
If granted, it would likely be the first time that a company in London has been allowed to list below the recent 10% rule.
Singapore-headquartered Shein, which sells $5 tops and $10 dresses mostly made in China, in June filed confidentially with the Financial Conduct Authority (FCA) for a London listing.
However, Britain's financial regulator is taking longer than usual to approve its application, Reuters reported last week.
The people declined to be identified as they were not authorized to speak to the media.
Shein declined to comment.
Shein was valued at $66 billion in a fundraising round last year. A 10% flotation at that valuation would make the IPO worth $6.6 billion. The biggest European IPO this year was perfume and fashion company Puig's $2.9 billion deal, according to Dealogic.
The current valuation of Shein and how much it is looking to raise via the London listing was not immediately known.
London changed its listing rules in 2021 to boost the attractiveness of the venue for companies. It cut the proportion of shares an issuer is required to float to 10% from 25%, reducing potential barriers for large IPOs, the FCA said at the time.
In July, Britain ushered in the biggest reform of company listing rules in more than three decades to help it compete more effectively with New York and the European Union for new issuers.
Shein began to explore a listing on the London Stock Exchange early this year, Reuters reported in May, citing sources. The China-founded company's original plan to list in New York was derailed after opposition from US lawmakers.
Shein is also waiting for China's securities regulator to approve its plans for a London IPO, Reuters previously reported. Its revenues are expected to hit $50 billion this year, up 55% from 2023, according to Coresight Research.