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Morgan Stanley Says Nike is Losing to Adidas and Under Armour

Nike is facing stiff competition from Adidas and Under Armour—and it’s losing share in active apparel and footwear as a result.

“Adidas’ resurgence, Under Armour’s basketball gains and the weak U.S. athletic apparel environment remain headwinds for Nike,” Morgan Stanley analysts wrote in a note to investors this week, Business Insider reported.

Despite Forbes crowning Nike the most valuable apparel brand in the world earlier this year, the analysts pointed out that its earnings per share growth has hit a wall. Not to mention, sales have slowed and inventory levels are rising, meaning that Nike’s mission to meet $50 billion in annual sales by the end of fiscal 2020 seems impossible.

Add to this the fact that Adidas and Under Armour shares rose more than Nike’s did during the Olympics—Nike is actually the worst performing Dow stock in 2016—and things aren’t looking too good for the Beaverton, Oregon-based brand.

That being said, Adidas and Under Armour both have a long way to go before their revenues reach Nike heights. The brand hit total revenue of more than $30 billion in fiscal 2015. By comparison, Adidas pulled in $18 billion and Under Armour made just under $4 billion.

But both brands are making Nike sweat. Adidas sales surged 21 percent in its most recent quarter, versus the same period a year earlier, while Under Armour sales soared 28 percent in the three months ended June 30. Nike, meanwhile, only recorded a 6 percent increase in sales in its most recent quarter.

Attention now turns to Sept. 27, when Nike will release the results of Q1 2017. Wells Fargo analysts are expecting the company to cut its full-year guidance, after a poor start to the back-to-school season.