Nike’s Focus on Innovation and Sports Are Keys to a Comeback Amid Heavy Competition

We view Nike as the leader in the athletic apparel market and believe it will recover from recent problems, including lackluster product development, soft sportswear demand, and strained relationships with wholesale accounts. However, we downgraded our Morningstar Economic Moat Rating to narrow from wide due to rising competition in sportswear. We base our narrow moat rating on its intangible brand asset, as we believe it will maintain premium pricing and generate economic profits for at least 10 years.