Core Viewpoint - Nike has experienced a significant decline in stock price, dropping 55% since January 2021, and currently trades 63% below its peak, raising questions about its future performance over the next five years [1]. Group 1: Strategic Changes and Challenges - The COVID-19 pandemic has altered Nike's strategic priorities, shifting consumer behavior towards online shopping and away from physical retail [2]. - Previous leadership focused on core franchise products, which may have lost their appeal due to excessive supply, while also aggressively pursuing direct-to-consumer sales and reducing third-party retail partnerships [3]. - As the economic environment and consumer behavior normalized, Nike struggled to maintain momentum, leading to pressure on sales and profits [4]. Group 2: Leadership and Turnaround Strategy - CEO Elliott Hill, who took over in October 2024, has initiated a "Win Now" strategy that focuses on product innovation, improving relationships with wholesale accounts, and strengthening the brand [4]. - Hill described the company's current phase as being in the "middle innings" of a turnaround, acknowledging the challenges and uncertainties ahead for potential investors [5][7]. Group 3: Financial Outlook - Analyst estimates project Nike's revenue to reach $46.7 billion in fiscal 2026, reflecting a 0.9% year-over-year increase, while earnings per share are expected to decline by 28% [8].

Key Takeaways NKE saw running grow more than 20% in Q1 2026, though performance remained uneven across the portfolio.Running franchises and stronger wholesale trends helped stabilize results as Sportswear stayed soft.China revenues fell 10% and digital dropped 27%, adding pressure as NKE works to rebuild momentum.NIKE Inc’s. (NKE) first-quarter fiscal 2026 results show progress in rebuilding momentum, though performance remains uneven across the portfolio. Running was the standout, growing more than 20% as ...

Business Strategy & Performance - Nike is refocusing on the athlete as the central point of its strategy [2][16] - The company aims to improve competitiveness and drive revenue and market share gains by segmenting brands by sport [10] - Nike is working to ensure a consumer-right assortment for each shopper and location, aiming to elevate presentation and drive sell-through [13] - Nike is focused on being the most profitable brand wherever its products are sold, driving revenue and profit for both the company and its retailers [13][14] Product & Inventory Management - Nike is addressing over-reliance on Air Jordan 1, Air Force One, and Nike Dunk franchises [4] - The company is still working to clean up Dunk inventory, with analysts estimating $4 billion in revenue from Nike Dunk in fiscal year 2025 [4][5] - Nike is phasing out the Dunk and working with wholesale partners to clear remaining stock [5] - Air Force One is returning to a good inventory position [4] - A Caitlyn Clark shoe is in development, with careful attention to her logo and product preferences [7][8] Distribution & Partnerships - Nike is re-engaging with retail partners like Macy's, DSW, and Academy Sports to boost sales [12] - The company is back on Amazon with a thoughtful assortment strategy tailored to specific consumers [10][11] Employee Morale - Nike has shifted back to its core mission of serving the athlete, which has elevated morale and focus among employees [16]

Core Insights - Nike is refocusing on its core mission of putting athletes at the center of its strategy after experiencing significant market value loss due to previous missteps [2][16] - The company is working to clear excess inventory, particularly for its major franchises like Air Jordan 1, Air Force One, and Nike Dunk, which have seen a decline in consumer interest [3][5] - Nike is re-engaging with retail partners to boost sales after years of focusing on direct-to-consumer strategies, ensuring a thoughtful assortment of products across different retail environments [12][14] Inventory Management - Nike has been slashing prices to manage excess inventory, particularly for the Nike Dunk, which generated an estimated $4 billion in fiscal 2025 but is now being phased out [3][5] - The company acknowledges the need to improve inventory levels for its key franchises, with ongoing efforts to restore the appeal of the Dunk and Air Jordan 1 [4][5] Product Development and Innovation - Nike is launching new products, including a 4-in-1 jacket for the upcoming Olympics and a shoe for athlete Caitlyn Clark, indicating a commitment to innovation and women's sports [6][7] - The company is enhancing its competitive edge in the running category by appointing a general manager for Nike running, focusing on product quality and storytelling [10] Retail Strategy - Nike is returning to retail partnerships with stores like Macy's and DSW, aiming to present its products in a premium manner while catering to diverse consumer needs [12][14] - The strategy includes ensuring that the brand's premium image is maintained across all sales channels, whether direct or through wholesale [13] Employee Morale and Company Culture - The leadership is focused on improving employee morale by emphasizing a return to the company's foundational mission of serving athletes, which has positively impacted the workplace environment [16][17]

Core Viewpoint - Wells Fargo has raised its price target for Nike from $60 to $75, indicating a potential upside of 15% from current levels [1] Revenue Insights - The primary challenge for Nike has been the decline in sales from classic footwear lines, which is estimated to have cost around $6 billion over the past two years, but there is an expectation for stabilization moving forward [2] - Non-classic footwear has shown significant growth, with an acceleration in growth rates reaching approximately 20%, while apparel sales are also increasing [3] Consumer Behavior - There is a noticeable bifurcation in consumer spending, particularly in the U.S., with concerns about the upcoming holiday season being challenging [5] - However, early 2026 may present some positive factors, such as tax refunds and stimulus payments, which could lead to increased discretionary spending on items like sneakers and handbags [6] Product Innovation - Nike's recent product innovations, particularly in the performance running category, have been successful, contributing to improved visibility for the brand [6] Market Dynamics - The situation in China remains challenging, with a surplus of products in the marketplace and a need for strategic reevaluation. China accounts for 15% of Nike's sales, while North America represents 50%, which is performing well [8][9] - The cleanup of inventory in China is not expected to be completed until summer 2026, but this could lead to additional margin opportunities and growth in the following fiscal year [9]

Nike - Wells Fargo upgraded Nike to overweight from equal weight, raising the price target from $60 to $75, indicating a potential double-digit upside from current levels [2][4] - After three years of negative earnings revisions, visibility is improving, with profits and margins appearing to bottom out, setting the stage for a turnaround [3][4] - Wells Fargo expects Nike's earnings cycle to turn positive in the next 6 to 9 months, with sales stabilizing and margins recovering, raising EPS forecasts to $1.70 for fiscal year 2026 and $2.40 for fiscal year 2027, with a bullish case of up to $3 [4] Comcast - Comcast plans to relaunch the NBC Sports Network in the fall, reviving its former sports cable network to carry sports content available on Peacock, including NBA games, Big 10 football, and Premier League Soccer [6][7] - This strategy contrasts with the trend of cord-cutting, as Comcast is leaning into both streaming and traditional cable for sports content [7] Dollar Tree - Goldman Sachs downgraded Dollar Tree from buy to sell, with a new price target of $103, reflecting concerns about lower-income consumers preferring other discount retailers [11][12] - The downgrade indicates that the upside for Dollar Tree shares is becoming more challenging [12]

Core Insights - NIKE Inc. is implementing a "Sport Offense" strategy to unify its brands NIKE, Jordan, and Converse, aiming for sharper focus, faster innovation, and stronger consumer connections [1][8] - The strategy is inspired by the success in running, where double-digit growth was achieved through athlete-centric innovation [1] Brand Performance - Jordan Brand remains a cultural powerhouse, while NIKE is stabilizing core franchises like Air Force 1 and Air Jordan 1 [2] - Converse is undergoing a reset under new leadership to regain profitable growth through sharper positioning and refreshed designs [2] - The combination of these three brands creates a unique ecosystem that blends performance, lifestyle, and streetwear across various price points, which is NIKE's competitive edge [2] Market Challenges - NIKE faces hurdles such as softness in sportswear, lagging sales in China, and weaker digital traffic [3] - The company must prove that its brand trio can sustain momentum across markets, with management indicating that growth may not be linear [3] Competitive Landscape - Key competitors include adidas AG and lululemon athletica inc. [4] - adidas is recovering by focusing on brand strength and profitability, seeing renewed momentum from classic lifestyle products and core performance categories [5] - lululemon is outperforming in the premium activewear space, driven by innovation in performance fabrics and strong brand loyalty [6] Financial Performance - NIKE shares have declined by 19.3% year to date, compared to the industry's decline of 20.7% [7] - The forward price-to-earnings ratio for NIKE is 30.26X, higher than the industry average of 25.91X [9] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 23.6% for fiscal 2026, followed by a projected growth of 50.5% for fiscal 2027 [10]

Financial Data and Key Metrics Changes - Revenues for the quarter were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [21] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [22] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12% and Nike stores down 1% [21] - Wholesale grew 5%, indicating a positive trend in that segment [21] - The running business grew over 20% this quarter, showcasing strong performance in that category [9] - Sportswear continued to decline, with a 30% drop in classic footwear franchises [23][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [22] - Greater China revenue declined 10%, with Nike Digital down 27% and Nike stores down 4% [25] - EMEA revenue grew 1%, with Nike Digital down 13% and Nike stores up 1% [24] - APLA revenue grew 1%, with Nike Digital down 8% and Nike stores down 5% [26] Company Strategy and Development Direction - The company is focusing on the "Sport Offense" strategy, which aims to align teams by sport for better consumer insights and innovation [6] - There is a commitment to improving the sportswear segment and addressing challenges in Greater China and Nike Direct [15][17] - The company is investing in innovative products and emotional storytelling to connect with consumers [19] - The goal is to serve consumers across multiple channels, including specialty sporting goods and Nike Direct [63] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the Win Now actions and the potential for growth, particularly in North America [19] - The company expects Q2 revenues to be down low single digits, reflecting ongoing challenges [30] - Management remains focused on long-term health and profitability despite short-term pressures [34] Other Important Information - The company is facing a significant cost headwind from new tariffs, estimated at approximately $1.5 billion annually [28] - The strategic decision to reduce reliance on classic franchises and pull back on promotions is aimed at long-term brand health [18] - The company is actively working on refreshing retail environments and improving consumer experiences in Greater China [70] Q&A Session Summary Question: Can you help us think about the spring order book in the context of the holiday book? - Management noted that the spring order book is positive and reflects growth across North America, EMEA, and APLA, offsetting headwinds in Greater China [39][44] Question: How is the current marketplace in September trading? - Management indicated that the environment is dynamic, with good sell-throughs for recent product launches, but they are closely monitoring consumer behavior [49][51] Question: Can you elaborate on the early wins in North America and running? - Management highlighted a 20% growth in running and positive momentum in North America, attributing success to the Win Now actions and the Sport Offense strategy [57][59] Question: How much of the pressure in Nike Digital is due to reduced promotions? - Management confirmed that the organic traffic decline is primarily due to strategic repositioning and reduced promotional activity, with a focus on building momentum with wholesale partners [63][66] Question: What strategies are being used to turn the digital business in China? - Management emphasized leading with sport, innovative products, and local athlete activations to improve the digital marketplace, while also focusing on store refreshes [68][70]

Financial Data and Key Metrics Changes - Revenues for Q1 2026 were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [22] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12%, while wholesale grew 5% [21] - The running business grew over 20% this quarter, showcasing strong consumer response to new innovations [10] - Sportswear business continues to decline, with a 30% drop in classic footwear franchises [24][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [23] - Greater China revenue declined 10%, with Nike Digital down 27% [26] - EMEA revenue grew 1%, with Nike Digital down 13% [25] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport [6] - There is a commitment to improving the marketplace through innovative product offerings and emotional storytelling [19] - The company aims to enhance its digital presence while reducing reliance on classic franchises [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the win-now actions and the potential for growth in North America, despite challenges in Greater China [34] - The company expects Q2 revenues to be down low single digits, with gross margins declining due to new tariffs [32] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months to connect athlete performances with commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumers [12] Q&A Session Summary Question: Insights on the spring order book and holiday book context - Management noted that the spring order book is positive, reflecting growth in North America and EMEA, offsetting headwinds in Greater China [41][46] Question: Update on September trading and consumer demand - Management confirmed that Q1 performance was not influenced by pull forwards, with wholesale growth contributing to the results [51][54] Question: Early wins in North America and running growth - The company highlighted a 20% growth in running and positive signals from wholesale partners as indicators of success [58][59] Question: Traffic headwinds in Nike Digital - Management acknowledged that the decline in organic traffic is primarily due to strategic reductions in promotions and repositioning efforts [63][64] Question: Strategies for Greater China and store refresh costs - The company is focused on innovative products and local athlete activations to drive growth in China, with ongoing investments in the marketplace [66][69]

Investment Rating - The report maintains a "Buy" rating for key companies in the sportswear sector, including Anta Sports, Li Ning, and Xtep International, indicating a positive outlook for their long-term growth potential [4][8]. Core Insights - The sportswear industry is experiencing resilience in demand despite economic fluctuations, driven by increased health awareness and government policies promoting sports participation [1][13]. - In the U.S. and Japan, the growth of the sports industry is attributed to historical factors, including economic recovery, government support, and major sporting events like the Olympics [1][20]. - In China, the running and outdoor segments are key growth drivers, with a projected compound annual growth rate (CAGR) of 16% for high-performance outdoor apparel from 2024 to 2029 [3][30]. Summary by Sections Industry Analysis - The U.S. fitness club membership increased by 3.7% to 68.9 million in 2022, and outdoor activity participation among Americans aged 6 and above grew by 4.1% in 2023 [1][19]. - Japan's sports consumption has been steadily increasing, supported by economic recovery and the Tokyo Olympics, with a focus on low-barrier sports like running and fitness [20][25]. Competitive Factors - Product strength and brand value are critical for leading international sports brands like Nike and Adidas, which focus on product development and brand building [2][32]. - Domestic brands in China, such as Anta and Li Ning, are enhancing their product innovation and brand image through sponsorships and professional athlete endorsements [3][37]. Investment Recommendations - The report highlights Anta Sports as a key player with strong operational capabilities and a projected price-to-earnings (PE) ratio of 18 times for 2025 [4][8]. - Li Ning is recommended for its long-term earnings potential, with a PE ratio of 17 times for 2025, while Xtep International is noted for its stable performance and growth prospects in the running segment, with a PE ratio of 11 times for 2025 [4][8].