Andreeva: Nike's turnaround isn't linear, especially in a hypercompetitive market

Core Viewpoint - The company has lowered its price target but maintains an overweight rating, indicating a belief in long-term potential despite current challenges [1] North America Business - The North America segment is showing growth year-over-year, with strength in wholesale despite challenges in direct-to-consumer (DTC) channels [3][6] - New distribution partnerships, including with Amazon, are contributing positively to the North American business [7] Competitive Landscape - The company faces competition from brands like Hoka and On, which are gaining market share, particularly in the running specialty channel [4][5] - Hoka is seen as a significant competitor, while On is perceived to target a different consumer segment [5] China Business - The China segment has experienced a decline of 17% over six consecutive quarters, attributed to factors such as excessive promotions and lack of new products [7][9] - The wholesale channel in China is particularly challenged, with a large number of partners complicating turnaround efforts [10] Tariff Impact - The company is facing a $1.5 billion hit from tariffs, which is expected to affect gross margins by approximately 350 basis points in fiscal Q3 [11][12] - The net impact on margins for the year is estimated to be around 120 basis points, with the company working to mitigate these effects through selective price increases [12][13]