Positive implication of Nike's re-org on Topsports — On Dec 2, Nike announced an important organization change, which puts Nike's Brand Presidents & Geography leaders at the same senior leadership table with reduced organizational layers to more effectively implement Nike's "Sport Offense" strategy. In our view, the elevation of Nike China's leadership team (led by China CEO/Chairwoman of Ms Angela Dong) into Nike's global Senior Leadership Team will result in more global delegation, greater operating flexi ...

Academy Sports + Outdoors is seeing greater strength in footwear. “The best part of our business has been performance running,” said Matt McCabe, the outdoor retailer’s executive vice president and chief merchant, in a telephone interview Tuesday after the firm posted third quarter earnings results. “So really Nike’s Vomero, Brooks’ Glycerin, Asics’ Gel-Nimbus and New Balance’s FuelCell Rebel has been good for us.” More from WWD McCabe also noted Adidas’ new Adizero EVO SL Running shoe that also did well ...

The hedge fund manager takes big concentrated positions with his money.Bill Ackman runs one of the best-known hedge funds in the world, Pershing Square Holdings. That includes a hefty stake in Howard Hughes Holdings, where Ackman now serves as chairman after increasing Pershing Square's stake in the business. The plan is to turn the real estate business into a diversified holding company. In the meantime, however, the bulk of Ackman's investments are with his hedge fund, where he holds a highly concentrated ...

Core Viewpoint - Nike's stock has declined by approximately 15% over the past year, contrasting with a 14% rise in the S&P 500, raising questions about whether this presents a buying opportunity or signals deeper issues [2] Valuation - Nike's valuation metrics are surprisingly high despite its stock decline, with a price-to-sales ratio of 2.2, a P/E ratio of 35.6, and a price-to-free-cash-flow ratio of 34.2, all exceeding broader S&P 500 benchmarks [3] Growth - Nike's revenue has not only slowed but has also declined, with a drop of more than 7% in the past twelve months, falling from $50 billion to $46 billion [4] - The most recent quarter showed only a modest 1.1% year-over-year growth, significantly lagging behind the broader market expectations for a brand of Nike's stature [5] Profitability - Nike's operating margin is at 7.4%, well below the S&P 500's near 19%, indicating slim margins compared to peers and historical performance, which raises concerns for investors [6] Financial Stability - Nike maintains a strong balance sheet with manageable debt levels relative to its $97 billion market cap and a solid cash position that constitutes nearly a quarter of its total assets [7][8] Downturn Resilience - Nike has shown mixed performance during market downturns, with significant volatility in its stock price, including a 53% drop during the 2022 inflation shock, which was more than double the market's decline [11][10] Bottom Line - The current situation presents a paradox for Nike, with an undervalued stock but low sentiment, weak revenue growth, and below-market margins, suggesting caution for potential investors [11][12]

Core Viewpoint - The article emphasizes the significance of the upcoming earnings season in December for U.S. stocks, highlighting the potential for significant stock price volatility and the effectiveness of options as a tool for investors to amplify returns during this period [1][2]. Earnings Calendar - A detailed schedule of key U.S. companies' earnings releases for December 2025 is provided, including companies like AutoZone, GameStop, Adobe, and Nike, with specific dates and times for earnings announcements [1][2]. Options Strategies - The article outlines five classic options strategies that can be employed during earnings season: - **Buy Call**: A strategy for bullish investors expecting significant price increases [4][6]. - **Bull Call Spread**: A moderate bullish strategy with limited upside potential [7]. - **Buy Put**: A strategy for bearish investors anticipating significant price declines [9]. - **Bear Put Spread**: A moderate bearish strategy with limited downside potential [11]. - **Long Straddle**: A strategy for investors expecting high volatility in either direction [13]. Strategy Details - Each strategy includes specific scenarios for application, initial costs, potential returns, and risk profiles: - **Buy Call**: High potential returns with unlimited upside and maximum loss equal to the premium paid [6]. - **Bull Call Spread**: Limited risk and reward, with a defined maximum profit and loss [7]. - **Buy Put**: Limited maximum profit with a defined risk equal to the premium paid [9]. - **Bear Put Spread**: Similar to the Buy Put but with reduced risk and capped profit [11]. - **Long Straddle**: Captures significant price movements in either direction, with defined risk limited to the total premium paid [13]. Trading Considerations - The article advises investors to focus on the breakeven points of their strategies and to select options with sufficient time until expiration to avoid liquidity issues and time decay [4][6].

Core Insights - Nike and Under Armour reported earnings that indicate contrasting performance trends for the two athletic brands [1] Company Performance - Nike's earnings reflect a positive trajectory, suggesting strong market demand and effective brand positioning [1] - Under Armour's earnings reveal challenges, indicating potential struggles in maintaining market share and brand appeal [1] Market Implications - The divergent performance of Nike and Under Armour highlights the competitive landscape in the athletic apparel industry, with Nike gaining an advantage [1] - Investors may need to reassess their positions based on the contrasting financial results of these two companies [1]

Alexia Howard +1 917 344 8453 alexia.howard@bernsteinsg.com Richard J. Clarke, FCA +44 20 7676 6850 richard.clarke@bernsteinsg.com Callum Elliott, CFA, ACA +44 20 7676 7183 callum.elliott@bernsteinsg.com Danilo Gargiulo +1 917 344 8475 danilo.gargiulo@bernsteinsg.com Zhihan Ma, CFA +1 917 344 8303 zhihan.ma@bernsteinsg.com 3 December 2025 U.S. Consumer Strategy and Quantitative Research U.S. Consumer Strategy - have we reached capitulation yet and should we prepare for a positive sector rotation? Nadine Sar ...

Core Viewpoint - Nike is undergoing a significant restructuring and turnaround strategy under CEO Elliott Hill, which is reflected in its stock performance and leadership changes [3][4][5][6]. Company Overview - Nike, headquartered in Beaverton, Oregon, is a leading global designer, marketer, and retailer of athletic footwear, apparel, and sports equipment, with a market cap of approximately $97.1 billion [2]. Stock Performance - Nike's stock has seen a 20.3% pullback from its 52-week high of $82.44, closing at $65.82, and has declined 16.2% over the past year and 13% year-to-date [1]. Leadership Restructuring - The company is restructuring its senior leadership team to streamline decision-making and enhance consumer connections, with key changes including the elevation of Venkatesh Alagirisamy to Chief Operating Officer [4][5]. Turnaround Strategy - Nike's "Win Now" plan aims to rebuild its wholesale business, reignite innovation, and correct past missteps in its direct-to-consumer strategy, amidst internal restructuring and external economic pressures [6][7]. Financial Performance - In Q1 FY2026, Nike reported revenue of $11.7 billion, a 1% increase year-over-year, with wholesale revenue rising 7% to $6.8 billion, while Nike Direct revenues fell 4% to $4.5 billion [9][10]. - Gross margin decreased by 320 basis points to 42.2%, leading to a 31% drop in net income to $0.7 billion and a 30% decline in earnings per share to $0.49 [11]. Geographic Performance - North America saw a 4% revenue increase, while Greater China experienced a nearly 9% decline, impacting overall results [12]. Future Outlook - Management expressed cautious optimism, expecting Q2 revenues to decline in low single digits and gross margins to decrease by 300 to 375 basis points [13]. - Analysts predict EPS to be around $1.65 for fiscal 2026, down 23.6% year-over-year, but forecast a significant recovery to $2.58 in fiscal 2027 [13]. Analyst Expectations - RBC Capital maintains an "Outperform" rating with an $85 price target, citing progress in inventory management and a stronger operational position entering 2026 [14][15]. - The consensus rating for Nike stock is "Moderate Buy," with an average price target of $82.76, indicating a potential upside of 25.5% [16].

Core Viewpoint - NIKE, Inc. is facing significant challenges in its transition, with declining revenues in key markets and deteriorating gross margins, raising concerns about its brand strength and future growth potential [2][3][4]. Financial Performance - Total revenue for Q1 FY2026 increased by 1% year-over-year to $11.7 billion, but North American revenue fell by 3% and Nike Direct sales decreased by 4% [2]. - Gross margin dropped by 320 basis points to 42.2%, attributed to higher product costs, unfavorable currency impacts, and extensive discounting to manage excess inventory [3]. Market Dynamics - The shift towards wholesale sales, which grew by 7%, indicates a strategic pivot as NIKE relies more on retail partners to mitigate weaknesses in direct sales channels [2]. - There is notable softness in Greater China and ongoing challenges in North America, countered by moderate growth in EMEA and APLA regions [4]. Strategic Initiatives - The "Win Now" initiative aims to revitalize core categories like running and basketball, but it is still in early stages with limited financial impact observed [3]. - The company's hesitance to provide guidance reflects uncertainty regarding the near-term outlook, influenced by inventory issues, macroeconomic pressures, and increased competition from brands like Hoka and On [4]. Sentiment and Outlook - Current sentiment around NIKE skews bearish, as the company struggles to transition from stagnation to sustainable growth, indicating a need for renewed identity and strategic clarity [4].

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