Nike falls after S&P cuts rating to A, negative outlook on 'protracted' turnaround
NKE•Nike shares fell about 3% after S&P Global downgraded its rating to A from A+, with a negative outlook. S&P expects the company to burn about $1.2 billion in cash annually over the next two to three years.
1. Downgrade and outlook
S&P Global said Nike’s turnaround will take more time and require higher investment than previously expected, and projected sharply lower revenue, profit and cash flows over the next 24 months, with continued pressure in China. It expects Nike to burn about $1.2 billion of cash annually over the next two to three years and said it could lower the rating further within 12 to 24 months if the company does not make progress stabilizing and turning around the business.
2. Shares and revenue forecast
Nike shares were down about 3% in morning trading. The stock hit a near 13-year low on Friday after Nike forecast a steep drop in full-year revenue; it was down about 49% year to date through the prior close.
