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's stock has dropped 62% from its peak due to declining sales, reaching new lows after the latest earnings update [1] - Analysts predict a 10% decline in sales for the fiscal year ending in May, indicating continued softness in demand [2] - Despite recent sales challenges, Nike's brand power remains strong, with trailing-12-month revenue of $47 billion [4] Recent Sales Trends - Last quarter, Nike's revenue fell 7% year over year on a constant-currency basis, with declines in both wholesale and Nike Direct revenues [3] - Competitors like Lululemon Athletica and On Holding continue to grow, highlighting Nike's current struggles [3] Strategic Initiatives - New CEO Elliott Hill is focusing on core products and streetwear, with running shoes showing a sales increase, indicating a positive trend [5] - The launch of the new 24.7 collection has exceeded expectations, and Nike is investing to expand capacity to meet demand [6] Valuation and Earnings Potential - Nike's current share price of $65 is the lowest in over five years, with a forward P/E ratio of 31, higher than its 20-year average of 29 [7] - If Nike returns to a profit margin of around 12%, earnings per share could reach approximately $3.80, reducing the P/E to 17 [8] - Analysts forecast earnings of $3.67 by fiscal 2027, with a forward dividend yield of 2.46%, suggesting potential attractive returns [9]

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]

Core Viewpoint - Nike continues to face declining revenue and profits, with expectations for further deterioration in the upcoming fiscal fourth quarter [1][4][10] Financial Performance - Nike reported a 9% decline in sales, totaling $11.3 billion, and earnings per share dropped to $0.54, down from $0.98 a year ago [1][2] - The company anticipates mid-teens revenue decline for Q4 and a gross margin decrease of 400 to 500 basis points due to unfavorable shipment timing and new tariffs [4][11] Leadership Changes - Elliott Hill has replaced John Donahoe as CEO, aiming to refocus on retailer relationships and a pull marketing strategy [3][12] Market Segments - The running segment saw mid-single-digit growth, driven by new product launches, while overall revenue in the Asia-Pacific Latin America segment fell by 4% on a currency-neutral basis [7][8] - Performance footwear and apparel experienced growth, although this was offset by declines in sportswear and the Jordan brand [8] Strategic Outlook - Management expects headwinds from the Win Now turnaround strategy to moderate after Q4, with a potential financial recovery beginning in fiscal 2026 [5][11] - The company is working on inventory overhaul and aims to return to a full-price business model, a process expected to take several more quarters [9][14] Investor Sentiment - Despite beating analyst estimates, investor confidence remains low, with the stock hitting a five-year low and hovering around seven-year lows [2][13] - The current situation presents a potential opportunity for investors, as the margin reset and focus on retail relationships may lead to improved performance in the future [14]

Group 1: Nike - Nike's share price has fallen 50% from its previous peak, prompting a leadership change with the appointment of Elliott Hill as CEO [3][5] - Bill Ackman's Pershing Square Capital Management has been accumulating Nike shares, holding over 18 million shares worth $1.4 billion by the end of Q4 [3][4] - Despite a trailing revenue of $49 billion, Nike has faced challenges with a 9% revenue decline and a 26% drop in net income in the most recent quarter [5][4] - The stock's P/E ratio is just under 24, which is lower than the S&P 500's 29 but still within Nike's historical range [6] - Over the past decade, Nike's revenue grew at a compound annual rate of 6%, while earnings per share grew 10% [7] - Analysts predict a 10% sales decline in fiscal 2025, with a potential recovery to 2% growth in fiscal 2026 [9] Group 2: Starbucks - Starbucks has faced challenges in a cautious consumer spending environment, but its stock has risen 18% since the announcement of Brian Niccol as the new CEO [10][11] - Two billionaire fund managers, Stephen Mandel and Andreas Halvorsen, have increased their stakes in Starbucks significantly [11][12] - Starbucks generated $3.5 billion in net income on $36 billion of revenue over the last year, with a global presence of over 40,000 stores [12] - The stock's P/E ratio is currently at 36, which appears expensive compared to a forward P/E of 31 based on next year's earnings estimates [13] - Starbucks has a 10-year average annualized sales growth of 8% and earnings growth of 9% [14] - Under Niccol's leadership, Starbucks is investing in improving service speed and technology, which may enhance customer satisfaction and sales [15]

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]