Company Performance - Deckers' stock fell after reporting fiscal fourth-quarter results that exceeded expectations but provided disappointing guidance [1] - The company achieved a 6.5% year-over-year revenue increase to $1.02 billion, with Ugg brand sales growing by 3.6% and Hoka sales increasing by 10% [1][2] - For fiscal 2025, overall revenue rose 16.3% to $4.99 billion, with Ugg sales up 13.1% and Hoka up 23.6% [2] Future Guidance - Management refrained from providing full-year guidance due to macroeconomic uncertainties, projecting a 9% revenue growth for fiscal 2026's first quarter [3] - Earnings per share are expected to decline due to rising costs from tariffs, freight, and increased promotional activities [3] Market Position - Deckers has gained market share from Nike, with a compound annual revenue growth rate of 19% over the last five years [4] - Hoka's revenue reached $2.23 billion in fiscal 2025, while Ugg's sales were $2.53 billion, indicating Hoka's strong position in the running category [4] Competitor Analysis - Nike has experienced a decline in revenue for several quarters, missing out on a post-pandemic boom in running [6] - However, Nike's sales in the running category grew by a mid-single-digit percentage in fiscal 2025 Q3, indicating a potential recovery [7][8] - Hoka's 10% revenue growth suggests it is still gaining market share from Nike, but analysts believe Nike may be regaining ground [9][10] Analyst Insights - Jefferies analyst Randal Konik suggests that Hoka's slowing growth may indicate a shift in market share back to Nike [10] - Jefferies has given Nike a buy rating with a price target of $115, which is approximately 85% higher than its current level [11] - Nike is currently trading at its lowest enterprise-value-to-sales multiple in 15 years, primarily due to a decline in stock price [12]

Core Insights - Nike has reported its first financial results under the new CEO, showing revenue of $11.269 billion and net profit of $794 million, both exceeding analyst expectations [1] - The company is undergoing a transformation, with signs of improvement in inventory management and revenue recovery in key markets, particularly North America and China [2][6] Financial Performance - In the Greater China region, Nike recorded revenue of $1.733 billion and EBIT of $421 million during the quarter [2] - Nike's inventory decreased by 2% year-over-year to $7.5 billion, indicating progress in inventory management [5] - North American revenue for the third quarter was $4.864 billion, a decline of 4%, but showing improvement from previous quarters [6] Strategic Initiatives - Nike is focusing on product innovation and returning to its core athletic identity, with significant investments in marketing and product development [4][7] - The "Win Now" strategy emphasizes key markets, including China, and aims to enhance brand competitiveness and operational efficiency [6][7] Brand and Marketing - Nike's marketing expenditure increased by 8% to $1.1 billion, reflecting a renewed focus on brand storytelling and athlete narratives [7][16] - The company has re-engaged with major sports events and partnerships, including a long-term agreement with the NFL, to reinforce its presence in professional sports [17] Product Development - Recent product launches, such as the Vomero 18 and Nike Pegasus Premium, have received positive market feedback, contributing to growth in the running segment [14] - Nike's commitment to professional sports and innovation is seen as a strategic move to regain market share and enhance brand value [17][18] Leadership and Culture - The appointment of Elliott Hill as CEO marks a return to Nike's foundational values, emphasizing a balance between data-driven strategies and the company's athletic heritage [13][14] - The leadership transition aims to restore confidence in Nike's brand identity and operational direction, focusing on a consumer-centric market approach [11][13]

Financial Data and Key Metrics Changes - Q2 revenues decreased by 8% on a reported basis and 9% on a currency-neutral basis, primarily due to franchise management actions [32] - Gross margins declined by 100 basis points to 43.6% on a reported basis, impacted by higher markdowns and channel mix headwinds [32] - Earnings per share was reported at $0.78 [33] Business Line Data and Key Metrics Changes - NIKE Direct revenues fell by 14%, with NIKE Digital down 21% and NIKE Stores down 2% [32] - The sport performance field of play grew year over year, while sportswear experienced a double-digit decline [37] - In North America, NIKE Direct declined 15%, with NIKE Digital down 22% and NIKE Stores down 3% [39] Market Data and Key Metrics Changes - In Greater China, Q2 revenue declined by 11%, with NIKE Direct down 7% and wholesale down 15% [44] - EMEA revenue decreased by 10%, with NIKE Direct down 20% and NIKE Digital down 32% [42] - APLA revenue was down 2%, with NIKE Direct declining 4% and NIKE Digital down 8% [47] Company Strategy and Development Direction - The company aims to reposition the business by focusing on sport and athlete-centric strategies, emphasizing the need to leverage its strengths [12][13] - Plans include a shift towards a full-price model and reducing reliance on promotional activities [50] - The company is committed to rebuilding relationships with wholesale partners and enhancing brand marketing efforts [26][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the current macro environment but expressed optimism about the potential for growth through strategic actions [46][49] - The focus will be on creating a consumer-led marketplace and driving innovation through sport [62][99] - Management expects Q3 revenues to decline low double digits, with gross margins down approximately 300 to 350 basis points [53] Other Important Information - The company is increasing investments in brand marketing and sports marketing to support key product launches [51] - There is a commitment to clean up the marketplace and reduce aged inventory to create space for new products [50][93] - Management is optimistic about the upcoming product pipeline and the potential for returning to growth [79][90] Q&A Session Summary Question: Can you elaborate on the relationships with retail partners and earning back shelf space? - Management emphasized the commitment to leading a consumer-led marketplace and the positive reception from wholesale partners regarding innovative products and brand statements [61][64] Question: How are you planning near-term investments in the business? - The focus will be on putting sport at the center of operations, shifting investments from performance marketing to brand marketing, and prioritizing five key sports [70][72] Question: What is the expected pressure on 2026 sales due to lifestyle acceleration? - Management acknowledged the need to reduce inventory concentration and is excited about the innovative products coming to market, which will help offset pressure [78][79] Question: How far is the company willing to take short-term actions for long-term benefits? - Management is acting with urgency to reposition the brand and is confident that the investments made will yield positive results in the long term [98][101] Question: What are the key fields of play opportunities? - The company is focusing on five key fields: running, basketball, global football, training, and sportswear, with a strong emphasis on product innovation [105]