Shares of Nike (NYSE: NKE) were moving higher today after the sportswear company seemed to benefit from a cooler-than-expected Producer Price Index (PPI) report, showing inflation was falling faster than expected. The stock was also helped after Starbucks soared on news it was replacing its CEO, since many on social media said they would like Nike to make a similar move.
Shares of Nike 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, the better-than-expected PPI reading sent the stock market surging, lifting consumer-facing stocks like Nike that have struggled with inflation. Falling inflation is good for consumers and is likely to lead to lower interest rates, which tends to lift stock prices.
Wholesale prices were up just 0.1% from June to July, and up 2.2% year over year, essentially matching the Fed's target of 2% inflation. Wholesale prices tend to be a leading indicator for costs at the consumer level, so it bodes well for companies like Nike.
And the news that Starbucks had poached CEO Brian Niccol from Chipotle Mexican Grill had a big impact on both stocks, showing that Starbucks investors were happy to see Laxman Narasimhan removed after 17 months and were confident in Niccol, a seasoned restaurant chief who turned around Chipotle after the E. coli crisis.
Investors seem to think Nike could benefit from a similar change as critics say that management under CEO John Donahoe has moved away from the company's strengths and is overly focused on the direct-to-consumer channel.
Will Nike get a new CEO?
There's no hint that a change in the top executive post could be afoot at Nike, but there rarely is with CEO firings.
Shares are now down 56% from their pandemic-era peak, and the company has consistently lost market share to upstart rivals like On Holding and Deckers' HOKA brand.
Nike also expects sales to fall in the current fiscal year. There's no doubt that the brand is in trouble and needs some kind of change. A new CEO certainly isn't out of the question.
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Jeremy Bowman has positions in Chipotle Mexican Grill, Nike, and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nike, and Starbucks. The Motley Fool recommends On Holding and recommends the following options: 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.
