Nike Inc. shares are on the move.
Shares of Nike rose 2.8 percent to close at $45.44 Wednesday following the news that company chief executive officer and president Elliott Hill, lead director and Apple CEO Tim Cook, and director John W. Rogers, the founder of Ariel Capital Management, bought more Class B common stock in the Swoosh. The combined purchases totaled 52,660 shares. Hill paid $1 million, Cook paid nearly $1.1 million, and Rogers paid $173,360 for their new investment in Nike.
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Hill and Cook previously made news when they each acquired shares of Nike stock on Dec. 29. Hill spent $1 million to acquire 16,388 shares of Class B common stock, his first purchase of Nike stock since becoming CEO. Cook on Dec. 22 purchased 50,000 shares, spending nearly $2.95 million in the process. On that same day, Andreessen Horowitz’s growth investing team operating partner and Nike director Robert Swan acquired 8,691 shares at a total cost of $500,080.
According to the latest regulatory filings, Hill now owns 265,247 shares of Nike, Cook owns 130,480 shares, and Rogers owns 41,022 shares.
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Investors tend to view insider purchases as a positive because it’s typically a sign or signal that management and the board believe in the future prospects of the company.
The stock purchases are a much-needed signal that Nike’s turnaround remain in progress and on track, even if it might take a bit longer than initially planned.
Nike on March 31 posted third quarter results that beat Wall Street estimates despite continued weakness in its China business amid steep declines at its Converse brand. Net income fell 35 percent to $520 million, with diluted earnings per share (EPS) at 35 cents, on flat net sales at $11.3 billion. The consensus among Wall Street analysts were EPS of 28 cents on revenue of $11.2 billion.
But what investors didn’t like were the bumps in Nike’s China business, as well as the disclosure that weakness in Europe resulted in a revenue drop of 7 percent in its EMEA (Europe, Middle East and Africa) operations due mostly to softness in sportswear and a highly promotional environment.
UBS analyst Jay Sole suggested that Nike’s fashion-driven sportswear business should be pulled back to no more than 30 percent of the brand’s total mix. He said sportswear is now more than 50 percent of total sales, and because it is essentially a fashion business, the category is subject to the whims of the buying consumer who is more aligned with changes in fashion trends.