Nike and Simon Property Group will soon lose their places on the S&P 100, according to a list from the S&P Dow Jones Indices released last week. The companies being added to the cohort are largely from the tech sector.
The changes take effect ahead of trading on Sept. 21, a Monday, and are designed to “ensure that each index is more representative of its market capitalization range,” according to a Friday press release. Both remain on the larger S&P 500.
Nike, Simon and other stocks that will be removed from the S&P 100 could see their share prices dip as funds based on that list sell them, but that’s only a “slight issue,” according to GlobalData Managing Director Neil Saunders.
“The removals are meaningful but they’re symbolic rather than problematic,” he said.
It’s also a reflection of relative growth, he and other analysts said.
“My sense is that this is more about other companies growing rapidly than anything specific to Nike or Simon,” said Nick Egelanian, president of retail development firm SiteWorks.
On its website dedicated to investors, Simon Property Group boasts that it is “a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company.” The real estate firm will have to drop that designation, though it’s somewhat surprising that it was on the 100 list to begin with, Egelanian said by email.
Indeed when it comes to Simon, “there’s no real business failure or issue here. It’s just a reshuffle of the index,” Saunders said. Bank of America analysts last month said the company’s strong performance in the first half of the year “reinforces [its] growth story.”
It’s a somewhat bigger deal for the sports apparel giant, though, according to Saunders.
“For Nike, the move is a little more sensitive as it underlines the company’s broader problems and its loss of value as it tries to get the business back on track,” he said. “This is taking a lot longer than expected and the move off the S&P 100 just throws another spotlight on the difficult position the company finds itself in.”
Nike has been toiling away at a turnaround that has tested the patience of its investors. Following its most recent quarter, which showed some progress, analysts couldn’t agree on how meaningful the improvement was.
Nike’s brand heat appears to be cooling, according to a Tuesday research note from Wells Fargo analysts led by Ike Boruchow. The brand is among the “largest laggards,” with Hoka and Michael Kors, whose brand mentions on social media and elsewhere declined 10% in the second quarter.
