Nike (NYSE: NKE) shares rose today. The sportswear company appears to have benefited from a lower-than-expected Producer Price Index (PPI) report, showing that inflation is falling at a faster pace than expected. Starbucks’ surge on news of its CEO change also contributed to the stock’s gains, with many on social media saying they would like to see Nike make a similar move.
Nike shares were up 5.3% as of 2 p.m. ET on Tuesday.
Image source: Getty Images.
Do Nike investors want their own Brian Niccol?
First, a better-than-expected producer price index number sent the stock market soaring, boosting consumer stocks like Nike that have struggled with inflation. Lower inflation is good for consumers and likely leads to lower interest rates, which tends to boost stock prices.
Wholesale prices rose just 0.1% from June to July and 2.2% year-over-year, essentially in line with the Fed’s 2% inflation target. Wholesale prices tend to be a leading indicator of costs at the consumer level, which bodes well for a company like Nike.
And news that Starbucks had poached CEO Brian Niccol from Chipotle Mexican Grill had a major impact on both companies’ stock prices. Starbucks investors were pleased to see Lakshman Narasimhan fired after 17 months, signaling their confidence in Niccol, the veteran restaurateur who turned around Chipotle after the E. coli crisis.
Critics have said that CEO John Donahoe’s management team has moved away from the company’s strengths and placed too much emphasis on direct-to-consumer channels, and investors seem to think Nike would benefit from a similar change.
Will Nike get a new CEO?
There are no indications that Nike is planning a change in its chief executive, but such indications are rare when it comes to firing a CEO.
The company’s shares are now down 56% from their pandemic-era peak, and it continues to lose market share to emerging rivals such as On Holdings and Deckers’ HOKA brand.
Nike is also expecting a decline in sales this year, so it’s clear the brand is struggling and in need of some change. A new CEO is not out of the question.
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Jeremy Bowman owns shares of Chipotle Mexican Grill, Nike, and Starbucks. The Motley Fool owns shares of and recommends Chipotle Mexican Grill, Nike, and Starbucks. The Motley Fool recommends On Holdings and recommends long January 2025 $47.50 calls on Nike and short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Why Nike Stock is Up Today was originally published by The Motley Fool