Core Viewpoint - The company Nike is currently facing significant challenges, with flat revenue in fiscal 2024 and a 9% decline in the first half of fiscal 2025, leading to a stock price that is 60% off its all-time high. However, there are potential opportunities for patient investors to consider buying the stock for long-term gains [1][2]. Management Issues - The previous management, led by former CEO John Donahoe, focused heavily on e-commerce, which was beneficial during the pandemic but has since led to a weakened in-store presence as consumer behavior shifted back to physical shopping [3]. - The strategy of emphasizing legacy franchise sneakers resulted in a decline in brand appeal, necessitating excessive promotional activities [4]. Future Outlook - The appointment of Elliott Hill as the new CEO is seen as a positive change, as he has extensive experience within the company and plans to refocus on wholesale channels and clear outdated inventory [6][7]. - Nike retains significant brand value, being one of the most recognizable consumer brands globally, supported by strong marketing and athlete endorsements, which provides a competitive advantage [8]. Financial Position - The company maintains a strong financial position, generating positive net income and free cash flow, with a debt burden of $9 billion considered manageable. Nike also holds nearly $10 billion in cash and short-term investments [9]. - The stock is currently trading at a price-to-earnings ratio of 21.9, which is lower than both the S&P 500 and its historical average of 37.4, indicating a potentially attractive entry point for investors [10]. Market Challenges - The apparel and footwear markets are highly competitive, with rapidly changing consumer preferences. Nike must continuously innovate to meet consumer demands [11]. - The new leadership team recognizes the importance of adapting to market trends and consumer interests [12].

Industry Overview - The athletic and lifestyle footwear industry is rapidly evolving due to changing consumer preferences, technological advancements, and a focus on sustainability [1] - Consumers are increasingly looking for products that combine comfort, style, and performance while supporting ethical practices [1] - The rise of e-commerce and direct-to-consumer channels has transformed the market, enabling brands to connect more effectively with their audience [1] NIKE Inc. Challenges - NIKE Inc. has faced significant challenges, including supply-chain disruptions, rising input costs, and market saturation, leading to a Zacks Rank 5 (Strong Sell) [2][4] - Supply-chain issues have delayed product deliveries and increased operational costs, particularly due to dependence on international manufacturing in Asia [3] - Increased input costs have pressured profit margins, and while NIKE has attempted price hikes, this may alienate price-sensitive customers [4] - Market saturation in North America and Europe complicates growth, with intense competition from both established and emerging brands [4] - Growing consumer demand for sustainability has put NIKE under scrutiny, with critics claiming its progress lags behind competitors [5] NIKE's Strategic Positioning - NIKE's CEO Elliott Hill has initiated actions to reposition the brand and revitalize momentum through sport, including transitioning to a full-price digital platform and reducing promotional reliance [6] - The company is scaling back on performance marketing investments, which will decrease paid traffic [6] Alternative Investment Opportunities - Investors may consider other footwear stocks such as Wolverine World Wide (WWW), Skechers (SKX), and Steven Madden (SHOO) as promising alternatives to NIKE [8] - Wolverine offers a diverse product portfolio and focuses on innovation with sustainable materials, showing a trailing four-quarter earnings surprise of 17% and projected growth of 6% in sales and 53.6% in EPS for 2025 [9][10] - Skechers has demonstrated strong growth through affordable pricing and a global presence, with a trailing four-quarter earnings surprise of 8.8% and projected growth of 10% in sales and 13.7% in EPS for 2025 [11][12] - Steven Madden is recognized for its agility in adapting to fashion trends, maintaining healthy profit margins, and showing a trailing four-quarter earnings surprise of 9.8% with projected growth of 5.1% in sales and 11.8% in EPS for 2025 [14][15] Conclusion - The footwear industry presents opportunities for investment beyond NIKE, with companies like WWW, SKX, and SHOO showcasing strong fundamentals and innovative strategies [16]

Core Insights - Recent updates regarding Nike have been discussed, indicating ongoing developments in the company's operations and market performance [1] Company Updates - Stock prices referenced were from January 14, 2025, showing a slight decrease of 0.14% for Nike [1]

Group 1 - The article highlights that Nike (NYSE: NKE) is recognized as a leading global sports brand, but it has experienced its second worst trading year in history since going public [1] - The analysis provided by HedgeMix focuses on the growth prospects of companies, utilizing the Discounted Cash Flow (DCF) model for valuation purposes [1]

Core Viewpoint - Nike Inc. has experienced a significant decline in stock value, dropping 60% from its all-time high in late 2021, and is currently trading at levels last seen in 2018, prompting increased scrutiny from Wall Street [1][2] Group 1: Company Performance - The year 2024 was mixed for Nike, with solid headline number beats but squeezed margins due to rising costs and competition [2][3] - Despite year-over-year revenue decline, Nike finished 2024 positively, exceeding expectations in its December earnings report [3] Group 2: Leadership Changes - The appointment of Elliott Hill as the new CEO is generating optimism among analysts and investors, as he is known for driving operational efficiency and revitalizing brands [3][6] - February's earnings report will be critical to assess Hill's impact on the company's performance [3] Group 3: Analyst Sentiment - Analysts have recently upgraded their ratings on Nike, with Piper Sandler raising its rating from Neutral to Overweight and setting a price target of $90, indicating a potential upside of approximately 30% [5][6] - Other firms like DA Davidson, Truist Financial, and Robert W. Baird have also issued Buy ratings, reflecting confidence in Nike's recovery [6] Group 4: Technical Indicators - Nike's stock is currently considered oversold, with a Relative Strength Index (RSI) of 28, suggesting a potential bounce back [9] - The stock is testing a long-term support level from 2018, which may provide a foundation for future gains [10] Group 5: Market Outlook - Analysts are generally bullish about Nike's potential turnaround, with expectations of a return to profitable growth by late 2025 [6] - Despite some caution from a minority of analysts, the overall sentiment leans towards optimism for investors looking for entry points [8][11]

Industry Overview - Most footwear brands launched six or more shoes in 2024, with Asics, Adidas, Brooks Running, and Hoka leading in running shoe launches [1] - Nike had fewer than six running shoe launches in 2024, trailing competitors like Asics and Adidas [1][7] - Brands like On Running and Hoka have been growing in popularity, with Brooks' Q2 2024 North American sales growing 19%, a quarterly record [2] Nike's Strategy and Performance - Nike is redefining itself as a "running brand" to improve sales and keep up with competition [1] - Nike's revenue for the brand grew only 1% last year, with the North America region being a drag [6] - The company acknowledges that a comeback at this scale takes time but sees early wins in key sports and innovation [3] Product Launches and Future Outlook - Asics launched or updated 11 performance running models in 2024, while Adidas and Brooks launched or updated 10 and nine models, respectively [5] - Nike only updated its current running shoe lineup and released no new models in 2024 [5] - Nike plans to launch the Pegasus Premium in late January and the Vomero 18 on February 25, with more models like the Vomero Plus, Premium, and new Structure model coming later in 2025 [5] - BMO analysts remain optimistic about Nike's 2025 lineup, citing a more promising launch schedule and positive consumer response [5][7] Leadership Changes - Nike brought veteran employee Elliott Hill out of retirement to take over as CEO in October 2024 [6]

Core Viewpoint - The article highlights that despite the S&P 500's 51% increase over the past 24 months, Nike's stock is down 60% from its peak, presenting a potential buying opportunity for long-term investors [1][2]. Group 1: Company Performance - Nike holds a dominant position in the global athletic footwear and apparel industry with a 16.4% market share [3]. - The company has faced challenges leading to a decline in revenue and net income, with sales and net income down 8% and 26% respectively in the second quarter of fiscal 2025 [4][9]. - The stock's decline is attributed to a loss of investor confidence, as it has dropped 60% since November 2021 [9]. Group 2: Competitive Advantages - Nike's powerful brand and storytelling ability resonate with consumers, maintaining its relevance over decades [5]. - Partnerships with top athletes and major professional sports leagues enhance Nike's exposure to a broad audience [5]. Group 3: Leadership and Strategy - Elliott Hill, the new CEO, brings a fresh perspective, which is essential for Nike's recovery [6]. - A focus on winning back wholesale accounts and enhancing product innovation is crucial for meeting consumer preferences [7][8]. Group 4: Valuation and Investment Opportunity - Nike's current price-to-earnings (P/E) ratio is 22.1, significantly lower than its average P/E of 37.5 over the past decade, indicating a potentially attractive buying opportunity [10]. - The decline in earnings per share (EPS) to $3.30 year over year further suggests a discounted valuation for prospective investors [10][11]. - The turnaround for Nike will require time, but the opportunity to invest in a leading company with a strong brand is compelling [12].

Like an athlete going through a slump, Nike (NKE -1.11%) finds itself at a critical juncture. The sportswear giant's shares have tumbled nearly 30% over the prior 12 months, while the S&P 500 (^GSPC 0.16%) has delivered total returns of 27.5%, including dividends.Despite the sharp decline, Nike's stock still commands a premium valuation at 30.8 times forward earnings. Let's break down the athletic apparel giant's fundamentals to determine if this contrarian setup presents a buying opportunity at the onset o ...

Revenue Performance - NIKE, Inc. revenues for Q2 fiscal 2025 were $12.4 billion, down 8% from $13.4 billion in Q2 fiscal 2024[79] - NIKE Direct revenues for Q2 fiscal 2025 were $5.0 billion, down 13% from $5.7 billion in Q2 fiscal 2024, representing 42% of total NIKE Brand revenues[79] - NIKE Brand wholesale revenues for Q2 fiscal 2025 were $6.9 billion, down 3% from $7.1 billion in Q2 fiscal 2024[79] - NIKE Brand footwear revenues for Q2 fiscal 2025 were $7.7 billion, down 11% from $8.6 billion in Q2 fiscal 2024[84] - NIKE Brand apparel revenues for Q2 fiscal 2025 were $3.7 billion, down 1% from $3.8 billion in Q2 fiscal 2024[84] - NIKE Brand equipment revenues for Q2 fiscal 2025 were $544 million, up 14% from $479 million in Q2 fiscal 2024[84] - Converse revenues for Q2 fiscal 2025 were $429 million, down 17% from $519 million in Q2 fiscal 2024[84] - NIKE, Inc. revenues for Q2 fiscal 2025 were $12.4 billion, a 9% decrease on a currency-neutral basis compared to $13.4 billion in Q2 fiscal 2024, driven by declines in North America, EMEA, Greater China, and Converse[88] - NIKE Brand footwear revenues decreased 12% on a currency-neutral basis in Q2 fiscal 2025, with unit sales down 7% and lower ASP reducing revenues by 5 percentage points[88] - NIKE Direct revenues for Q2 fiscal 2025 were $5.0 billion, a 14% decrease on a currency-neutral basis, with NIKE Brand Digital sales declining 21% and comparable store sales down 2%[88] - North America revenues for Q2 fiscal 2025 were $5.179 billion, an 8% decrease on a currency-neutral basis compared to $5.625 billion in Q2 fiscal 2024[104] - Converse revenues for Q2 fiscal 2025 were $429 million, a 17% decrease on a currency-neutral basis compared to $519 million in Q2 fiscal 2024[104] - Footwear revenues decreased by 14% to $3.236 billion in Q2 FY2025, with a 14% decline to $6.448 billion for the first six months of FY2025[107] - Apparel revenues increased by 1% to $1.693 billion in Q2 FY2025, with a 4% decline to $3.024 billion for the first six months of FY2025[107] - NIKE Direct revenues decreased by 15% to $2.313 billion in Q2 FY2025, with a 13% decline to $4.664 billion for the first six months of FY2025[107] - EMEA revenues decreased by 10% on a currency-neutral basis, with NIKE Direct revenues down 20% due to a 32% decline in digital sales[115] - Greater China revenues decreased by 8% to $1.711 billion in Q2 FY2025, with a 6% decline to $3.377 billion for the first six months of FY2025[117] - EMEA revenues decreased 11% on a currency-neutral basis, with NIKE Direct revenues down 17% due to a 29% decline in digital sales, partially offset by 2% comparable store sales growth[119] - Greater China revenues decreased 11% on a currency-neutral basis, with NIKE Direct revenues down 7% due to an 8% decline in comparable store sales and a 4% decline in digital sales[120] - APLA revenues decreased 2% on a currency-neutral basis, with NIKE Direct revenues down 4% due to an 8% decline in digital sales[125] - Converse revenues decreased 18% on a currency-neutral basis, with unit sales down 12% and ASP down 6% due to higher discounts[130] Gross Margin and Profitability - Gross margin for Q2 fiscal 2025 decreased by 100 basis points to 43.6%, primarily due to higher discounts and changes in channel mix[79] - Gross margin for Q2 fiscal 2025 was 43.6%, a 100 basis points decrease compared to 44.6% in Q2 fiscal 2024, primarily due to lower NIKE Brand ASP and higher other costs[88][95] - Gross margin in North America was flat, impacted by lower ASP due to product mix, channel mix changes, and higher discounts[111] - Gross margin expanded by 140 basis points in EMEA, primarily due to lower product costs and reduced warehousing and logistics expenses[119] - Gross margin contracted by approximately 200 basis points due to lower ASP, higher logistics costs, and unfavorable foreign currency exchange rates[134] Expenses and Costs - Total selling and administrative expenses for Q2 fiscal 2025 were $4.005 billion, a 3% decrease compared to $4.146 billion in Q2 fiscal 2024, with operating overhead expenses down 5%[90][93] - Selling and administrative expenses decreased by 2% primarily due to lower operating overhead expenses[134] - Corporate loss before interest and taxes decreased 6% to $565 million, primarily due to unallocated general and administrative expenses[131] - Global Brand Divisions' loss before interest and taxes decreased 3% due to lower operating overhead expense, partially offset by higher demand creation expense[126] - Corporate's loss before interest and taxes increased by $30 million in Q2 FY2025 compared to Q2 FY2024[134] - Corporate's loss before interest and taxes decreased by $79 million in the first six months of FY2025 compared to the same period in FY2024[134] Regional Performance - North America EBIT decreased by 10% to $1.371 billion in Q2 FY2025, with a 13% decline to $2.587 billion for the first six months of FY2025[106] - Europe, Middle East & Africa EBIT decreased by 10% to $831 million in Q2 FY2025, with a 13% decline to $1.623 billion for the first six months of FY2025[106] - Greater China EBIT decreased by 27% to $375 million in Q2 FY2025, with a 16% decline to $877 million for the first six months of FY2025[106] - Total NIKE Brand EBIT decreased by 18% to $1.904 billion in Q2 FY2025, with a 19% decline to $3.589 billion for the first six months of FY2025[106] - Footwear revenues decreased 12% on a currency-neutral basis in EMEA, with unit sales down 12% and ASP per pair flat[119] - Apparel revenues decreased 10% on a currency-neutral basis in EMEA, with unit sales down 11% and higher ASP contributing 1 percentage point of growth[119] - Greater China footwear revenues decreased 14% on a currency-neutral basis, with unit sales down 9% and lower ASP reducing revenues by 5 percentage points[120] Cash Flow and Shareholder Returns - NIKE returned approximately $1.6 billion to shareholders in Q2 fiscal 2025 through share repurchases and dividends[79] - Cash provided by operations was $1,443 million in the first six months of FY2025, down from $2,751 million in the same period of FY2024[144] - Cash used in investing activities was $240 million in the first six months of FY2025, compared to an inflow of $875 million in the same period of FY2024[145] - Cash used in financing activities was $3,070 million in the first six months of FY2025, slightly lower than $3,151 million in the same period of FY2024[146] - The company repurchased 27.9 million shares for $2,254 million in the first six months of FY2025 under its $18 billion share repurchase program[147] - As of November 30, 2024, the company had $9.8 billion in cash and equivalents and short-term investments[152] - Obligations under endorsement contracts totaled $15.9 billion as of November 30, 2024, with $1.9 billion payable within 12 months[154] Inventory and Other Financial Metrics - Inventories as of November 30, 2024, were $8.0 billion, a 6% increase compared to May 31, 2024[79] - Other (income) expense, net decreased to $8 million in Q2 fiscal 2025 from $75 million in Q2 fiscal 2024, primarily due to unfavorable foreign currency conversion gains and losses[96][97] - Effective tax rate for the first six months of fiscal 2025 was 18.7%, compared to 15.2% in the same period of fiscal 2024, due to one-time benefits in fiscal 2024[100][101]

NIKE Inc. (NKE) continues to face challenges related to its operations, highlighted by sluggish lifestyle segment sales, issues in Greater China and reduced digital sales. These factors are affecting the company’s share price performance, which has slumped 29.6% in the past year.Shares of the Beaverton, OR-based company underperformed its industry peers, which collectively declined 24% in the past year. The NKE stock compared unfavorably with the broader Consumer Discretionary sector and the S&P 500 Index’s ...