Ackman's Pershing Square Takes Stake in Nike -- Update
January 25 2018 - 7:49PM
Dow Jones News
By David Benoit
William Ackman's Pershing Square Capital Management LP has taken
a passive stake in Nike Inc., based on a belief in the sneaker
giant's long-term growth prospects.
Mr. Ackman announced the position, accumulated since October, at
an event for his investors Thursday evening, according to a person
familiar with the matter. It isn't clear how big the stake is.
Mr. Ackman, one of the best-known activist investors, doesn't
intend to agitate for change at the Beaverton, Ore., company, the
person said, believing it is already on the right path.
Nike has a market value of about $110 billion. Though they have
rallied in recent months, Nike's shares are barely above a high
they reached in late 2015. The stock rose 1.9% in after-hours
trading after closing at $67.71.
Nike is in the midst of a dramatic shake-up in how it brings its
pricey Jordan sneakers and sports jerseys to market. The company --
traditionally a wholesale distributor -- said in October it would
shift away from what it called "mediocre" retailers, focusing
instead on highlighting just 40 stores and chains from its nearly
30,000 retail partners.
Nike founder Phil Knight has stepped aside from day-to-day
operations but still holds the title of chairman emeritus. He owns
about 300 million shares, or about an 18% stake, according to
S&P Capital IQ. In 2015, Mr. Knight created Swoosh LLC to hold
most of his shares. Swoosh has the power to elect 75% of Nike's
board, and the entity's directors include several Nike directors,
including Mr. Knight's son, Travis.
The company is also aiming to sell more online and directly to
its own consumers. Nike, long a holdout from Amazon.com Inc.,
finally agreed to sell some of its products to the e-commerce giant
last spring in hopes of fighting a growing number of third-party
sellers.
Nike has also refurbished a suite of its own sales apps,
launching coveted products through its own channels instead of at
big chains like Foot Locker Inc. One such launch, for a collection
of shoes designed by Virgil Abloh, drew scores of complaints from
customers who said the app froze or blocked them from filling in
information.
In a statement at the time, Nike said "We'll continue to learn
from issues that some consumers faced today to help us continuously
improve."
In recent years, Nike has also faced competition from a
resurgent rival, Germany's Adidas AG, as well as upstarts in the
crowded women's athletic-wear category, which include Lululemon
Athletica Inc., Fabletics and others.
Pershing Square is facing its own challenges after losing $4
billion on a bet on drugmaker Valeant Pharmaceuticals International
Inc. The fund hasn't made money in any of the last three years, and
even after stabilizing losses last year it remains well below
highs, putting pressure on Mr. Ackman to find big stock winners in
2018. The firm is already up about 30% on the Nike bet, having
bought around $52 a share, the person said.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
January 25, 2018 19:34 ET (00:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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