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• Nike is a leading global sports and apparel business – although it currently faces short-term challenges.
• The company is removing decks under CEO Elliott Hill’s leadership “Strategy Wins Now” – Return to sports and release groundbreaking products that differentiate the company while de-emphasizing lifestyle categories.
• In addition to improving its products, the company is also rebuilding relationships with wholesalers after a direct-to-consumer push under its former CEO, increasing investment in marketing and reducing promotional activity.
• Sales rose 1% in the first quarter, following a challenge in greater China (which fell 9%), although North American sales rose 3% (including 11% wholesale growth). The company is pushing for a recovery in China, including sending basketball stars as ambassadors to boost growth.
• The company manufactures in China, which was exposed by tariffs enacted by President Trump’s administration, contributing to gross margins falling 320 basis points to 42.2%. It will reduce imports from China by the end of December 26.
• While the company struggles due to a mix of internal and external factors, its share price reflects this – down 10.7% over the last 12 months – compared to the liquid S&P 500. We remain hopeful about the strength of the brand, its products and marketing opportunities. The recent CEO is prioritizing recent projects, and retailers are responding well to those efforts, including recent footwear that should lend a hand him regain momentum.