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To: Johnny Canuck who wrote (39819)	6/28/2003 12:54:57 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71583

Nike Shares Fall on Weak Orders Friday June 27, 6:11 pm ET By Frank Tang NEW YORK (Reuters) - Shares of Nike Inc. (NYSE:NKE - News), the world's largest maker of sports shoes, fell nearly 7 percent on Friday after it reported weak U.S. orders and Merrill Lynch downgraded the stock. ADVERTISEMENT Click Here Merrill Lynch analyst Virginia Genereux cut her rating to "neutral" from "buy," citing Nike's excess inventory that was hindering future shipment growth. Genereux also said Nike's relationship with Foot Locker Inc. (NYSE:FL - News) , one of Nike's top retail customers, does not appear to be improving. The two companies are in a dispute over the number of high-end Nike shoes Foot Locker sells. The biggest U.S. athletic shoe retailer said it had filled its shelf space with other brands, including items from U.S. No. 2 Reebok International Ltd.(NYSE:RBK - News) A U.S. Supreme Court decision on Thursday to dismiss a Nike appeal on whether it can be sued for false advertising over a publicity campaign also clears the way for a high-profile lawsuit against the company. Nike's stock fell $3.85 to close at $53.08 on Friday New York Stock Exchange trading, Genereux also downgraded Foot Locker's stock to "neutral" from "buy" due to declining business with Nike. Foot Locker shares slid 40 cents, or 3 percent, to finish at $13.10 on Friday. Noelle Grainger, an analyst at J.P. Morgan, said in a note that Nike's future U.S. orders remained weak as some retailers pared back demand for the company's apparel products due to previous delivery issues. Grainger said some of the company's distribution channels, such as Kohl's Corp. (NYSE:KSS - News) and J.C. Penny Co. Inc. (NYSE:JCP - News), were overstocked with Nike's products and they were reluctant to place more orders. Nike has lost some market share in the retro and classic footwear sector, as consumer demand remained robust, but it does not have a strong presence in those sectors. [Harry: SHOO, VANS, SKX] Nike's recent endorsement deals with high-profile basketball players, such as LeBron James, Kobe Bryant and Carmelo Anthony, may help boost its future sales. Nike's Air Jordans signature shoes were one of the best selling sneakers in the past. The weak U.S. sales performance was disclosed as Nike reported after the market closed on Thursday higher earnings that narrowly missed Wall Street estimates for the fourth quarter ended May 31. The company reported a 10 percent decline in U.S. orders for athletic footwear and clothing scheduled for delivery between June and November, while U.S. footwear revenue fell 3 percent for the quarter.