Nike Inc (NKE)

[winston]

vested

Bill Ackman usually buys a new position in a company when it is experiencing near-term problems because that often means the stock is on sale.

Nike certainly fits the bill. It's the largest athletic wear brand in the world, with $51 billion in annual revenue.

Two-thirds of its revenue comes from footwear. Ackman took advantage of the recent downturn in Nike stock to start a position in the second quarter.

The swoosh reported flat sales in fiscal 2024 (which ended in May). Higher interest rates are squeezing consumer spending right now, which is impacting many retail companies, but Nike continues to remain a very profitable business. The company's net profit grew 12% last year to $5.7 billion.

The problem for Nike is that it made a big push into fashion-leaning lifestyle products in recent years that initially benefited its growth but is now hurting sales as consumer preferences shift.

To respond to the challenges, Nike is making changes to its leadership and investing more in performance products to drive more growth. Management is calling fiscal 2025 a transition year, with revenue expected to be down mid-single digits as it adjusts its strategy.

Nike will bounce back. The athletic apparel industry is projected to grow from $358 billion in 2023 to over $450 billion by 2028, according to Statista. This gives a dominant brand like Nike a huge tailwind.

The stock is down 53% from its previous high and selling at its lowest valuation in years. Its price-to-earnings (P/E) ratio of 22 is cheaper than the average company in the S&P 500 index that trades at a P/E of 27, but that discount is a bargain for an industry-leading brand that is capable of growing earnings at double-digit annual rates as it did over the last decade.

Source: TMF

https://finance.yahoo.com/news/2-bargai ... 00877.html

[winston]

vested

Nike ousted beleaguered Chief Executive John Donahoe, bringing longtime executive Elliott Hill, out of retirement, in an effort to return the struggling athletic brand to its glory days.

Hill, 60, originally joined Nike in 1988 and served as president of consumer and marketplace before he retired in 2020.

He will take over on Oct. 14.

Donahoe, 64, will retire on Oct. 13 and will remain an adviser at Nike through Jan. 31.

Nike shares jumped as much as 10% in extended New York trading.

Source: Bloomberg

[winston]

vested

Nike withdraws annual revenue forecast, shares drop 6%

Source: Business Times

https://www.businesstimes.com.sg/compan ... res-drop-6

[winston]

vested

Nike stock tumbles as company withdraws guidance amid CEO change

1Q earnings per share of $0.70, higher than Wall Street's estimate of $0.52 and a 26% decline from the year-earlier period.

Revenue of $11.59 billion fell short of analyst estimates of $11.65 billion and marked a 10% decline from the year-earlier period.

Nike Direct revenues were $4.7 billion, a 13% decline from the same quarter a year ago.

Wholesale revenues were $6.4 billion, down 8% from the same period a year ago.

Source: Yahoo Finance

https://finance.yahoo.com/news/nike-sto ... 20693.html

[behappyalways]

Q1 FY2025 income statement for $NKE visualized
https://x.com/Mayhem4Markets/status/1841639123443970419

[winston]

vested

Full come back to take time

1Q FY25 revenue for Jun-Aug 2024 dropped 10% to USD11.6bn, in line.

Net income fell 28% to USD1.1bn, slightly better than consensus.

With the impending CEO transition that will take effect on Oct 14, FY25 full-year guidance will not be provided until a later stage.

2Q FY25 guidance. Nike expects revenue to fall 8-10%, with about 1.5ppt decline in gross margin for the quarter. Maintain HOLD.

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=21472

[winston]

vested

Nike results beat low expectations; CEO warns turnaround will be a slog

Revenues would fall by double digits in the third quarter.

Revenue fell 7.7 per cent to US$12.35 billion. Analysts had expected a 9.41 per cent fall to US$12.13 billion.

Earnings per share of 78 US cents, compared with estimates of 63 US cents per share.

Source: Reuters

https://www.businesstimes.com.sg/compan ... ll-be-slog

[behappyalways]

Why Nike Is Struggling
https://m.youtube.com/watch?v=jUzNEoI9PpE

[winston]

vested

1 Stock Down 60% That's a No-Brainer Buying Opportunity in 2025

by Neil Patel

16.4% market share.

Nike's financials have taken a hit (sales and net income down 8% and 26%, respectively, in the second quarter of fiscal 2025).

Price-to-earnings (P/E) ratio of 22.1.

The average P/E multiple for the stock in the past decade is 37.5.

Source: The Motley Fool

https://finance.yahoo.com/news/1-stock- ... 00347.html

[winston]

not vested

3 Reasons to Buy Nike Stock Like There's No Tomorrow

by Neil Patel

1. Nike has unmatched brand strength
58% of its revenue was derived outside North America.
2. Management has the right priorities
3. Shares are on the discount rack

Source: The Motley Fool

https://finance.yahoo.com/news/3-reason ... 00169.html