In this articleNKEwatch nowNew Balance sales grew 19% last year to $9.2 billion as the legacy sneaker giant continued to outperform the global footwear market and take share from floundering competitors like Nike.The 120-year-old Boston-based footwear brand, which is private, exclusively shared its 2025 results with CNBC. In addition to the sharp 2025 growth, the retailer said it could reach its goal of $10 billion in annual revenue by the end of the year."We're competitive. No question about it. But we wan ...

Group 1 - Anta Sports has confirmed a deal to acquire a 29.06 percent stake in Puma SE for $1.8 billion, making it the largest shareholder of the brand [1] - Analysts speculate that under Anta's guidance, Puma could see significant market amplification and enhanced marketing efforts, including new endorsements and store openings in key markets [2] - Puma is expected to adopt a more premium positioning globally, inspired by Salomon's successful strategy, which has included expanding offerings and opening flagship stores in prime locations [2] Group 2 - Salomon has experienced steady growth, supported by Anta's acquisition of Amer Sports in 2019 and Amer's IPO on the New York Stock Exchange in 2024, with a reported net income of $143.1 million in Q3 2024, up from $55.8 million in the same quarter the previous year [3] - Amer Sports CEO highlighted strong demand for Salomon's footwear across all regions, particularly in Asia, with growth in related products such as bags and socks [4] - The acquisition by Anta provides Puma with additional financial resources to address its ongoing "reset program," aimed at reducing high inventory levels and rethinking distribution strategies in key markets including Europe, the Middle East, Africa, China, and the U.S. [4]

Group 1 - Nike plans to cut nearly 800 jobs, specifically 775 positions, primarily affecting distribution centers in Tennessee and Mississippi as part of an automation initiative [1][5] - The company aims to strengthen and streamline operations to enhance speed, discipline, and service to athletes and consumers, focusing on advanced technology and automation [2][5] - These layoffs are part of a broader strategy to reduce complexity and improve operational efficiency, contributing to long-term profitable growth and improved EBIT margins [5] Group 2 - Nike's recent job cuts follow a previous announcement in August 2022 to reduce less than 1% of its corporate workforce, and a planned cut of 2% of its workforce, equating to over 1,600 workers, in February 2024 [6] - Under CEO Elliott Hill's leadership, Nike is investing in its running shoe and sneaker lines to regain market share lost to competitors, despite facing challenges such as declining gross margins and poor sales in China [9] - The company's stock closed at $64.99, reflecting a 2% increase year to date [9]

Group 1 - Nike is laying off 775 employees to boost profits and accelerate automation, primarily affecting distribution center roles in Tennessee and Mississippi [1][3] - The company has been struggling to regain its position as the leading sportswear brand after losing market share, leading to multiple rounds of layoffs in recent years [2] - Under CEO Elliott Hill, who took over in 2024, Nike has cut a total of more than 1,600 jobs, including a recent cut of nearly 1% of its corporate workforce [2] Group 2 - Nike's sales trends have been below normal for the past two years, indicating potential overcapacity in warehouses and overstaffing [4] - The company reported a decline in gross margins for the second consecutive quarter, impacted by poor sales in China and challenges in resetting its product mix [5] - The layoffs are intended to reduce complexity, improve flexibility, and support a return to long-term profitable growth [6]

Core Viewpoint - Nike is implementing layoffs of 775 employees to enhance profitability and increase automation within its operations [1][2][3] Group 1: Layoff Details - The layoffs are in addition to the previously announced 1,000 corporate job cuts and primarily affect distribution center roles in Tennessee and Mississippi [1][2] - The company aims to reduce complexity and improve operational efficiency through these layoffs [2] Group 2: Strategic Goals - Nike's layoffs are part of a broader strategy to achieve long-term profitable growth and improve margins [3] - The company is focusing on streamlining operations, enhancing supply chain efficiency, and investing in advanced technology and automation [2][3] Group 3: Industry Context - The trend of automation is impacting distribution center jobs across corporate America, with other companies like UPS also announcing significant job cuts due to automation [3] - The layoffs occur during a period of transition for Nike, as CEO Elliott Hill seeks to address challenges stemming from previous sales strategies [3][4]

Investment Rating - The report assigns an "Outperform" rating to Amer Sports with a target price of $46, indicating a 22% upside potential. Anta Sports is rated "Market-Perform" with a target price of HKD 89, suggesting an 8% upside. Li Ning is rated "Underperform" with a target price of HKD 17, indicating a 16% downside potential [6][7]. Core Insights - China's sportswear market is transitioning from high-growth expansion to mature growth, with total market growth moderating to approximately 6% CAGR through 2030E. The outdoor segment is expected to maintain a structural outperformance at around 12% CAGR [1][10]. - The market is shifting from "land-grab" growth to share reallocation and premiumization, with success increasingly reliant on brand differentiation, technical innovation, and channel efficiency [1][19]. - Technical specialists are gaining market share within the outdoor category, with brands like Arc'teryx projected to increase their share from approximately 7% in 2019 to around 20% by 2025E [3][23]. Market Dynamics - The outdoor segment is now the largest category, with growth moderating to +12% YoY from a previous CAGR of 29% (2021–2025E). Apparel is leading category performance at +18% YoY, while sneakers grew +14% YoY [2][13]. - The sportswear market is expected to normalize to mid-single-digit growth through 2030E, structurally outperforming broader retail by approximately 2 percentage points annually [11][21]. - The exercising population in China is projected to reach 630 million by 2035E, supporting long-term structural demand for sportswear [11][37]. Competitive Landscape - Market share is fragmenting away from generalists toward specialized brands, with Anta maintaining approximately 21% share and Li Ning around 9% by 2030E. The "Others" category is expected to decline significantly [15][51]. - Premium brands are forecasted to hold a stable share of around 54% through 2030E, while mass brands will remain at approximately 46% [12][48]. - Brand performance is highly polarized, with technical specialists like Arc'teryx and Salomon capturing significant growth, while many established brands stagnate or decline [4][16]. Brand Performance - Top performers in 2025 include Arc'teryx (+167%), Salomon (+150%), and Descente (+84%), while established brands like Li Ning and Nike are underperforming with growth rates below the market average [4][17]. - The report highlights that premium positioning alone is insufficient for success; continuous innovation and strong local relevance are critical [18][30]. Outlook and Implications - The sector is expected to shift from category expansion to share reallocation, with winners being those who can defend premium positioning and expand into adjacent categories [19][25]. - The outdoor segment is projected to continue outpacing overall sportswear growth, with a forecasted CAGR of approximately 13% from 2025 to 2030E [22][26].

Summary of Key Points from the Conference Call Companies and Industry Involved - **Broadcom Inc (AVGO)**: Added to the US Conviction List - **Dick's Sporting Goods Inc (DKS)**: Added to the US Conviction List - **Capital One Financial Corp (COF)**: Removed from the US Conviction List - **Cadence Design Systems Inc (CDNS)**: Removed from the US Conviction List - **Houlihan Lokey Inc (HLI)**: Removed from the US Conviction List Core Insights and Arguments Broadcom (AVGO) - Broadcom is expected to leverage its dominant position in enterprise networking silicon, which is projected to drive a majority share in customer silicon processors for major US hyperscalers, with AI expected to comprise over 40% of the company by 2026 [7] - The Street is believed to be underestimating the momentum in AVGO's AI optical networking business, with strong momentum reported from recent checks in Asia [7] Dick's Sporting Goods (DKS) - The acquisition of Foot Locker (FL) is seen as a strategic move to revitalize the sneaker category, with expectations of FL's gross margins increasing by 500 basis points [8] - The focus on near-term inventory build at FL is viewed as overshadowing the long-term strategic opportunity for both DKS and FL [8] Additional Important Content Market Commentary - The year 2025 was characterized by "noise, quiet, and transition," with significant policy changes and market dynamics impacting investor sentiment [10][11][12] - The S&P 500 EPS estimates for 2026 have risen by 6% over the year, indicating upward earnings momentum despite the surrounding noise [12] Themes to Watch in 2026 1. **AI & Power**: Transitioning to a new phase with emerging companies like AVGO gaining traction [18] 2. **Drug Development**: A shift towards new products in the GLP-1 category, with LLY outperforming NOVO [18] 3. **Blurring Lines in Retail**: Opportunities arising from eCommerce platforms driving revenue through advertising and alternative revenue streams [18] 4. **China's Economic Growth**: Expected above-consensus growth driven by technology advancements [19] 5. **Productivity-Driven Margin Growth**: Risks associated with a jobless expansion due to tech-driven productivity improvements [20] Performance Insights - The Conviction List has seen significant idiosyncratic returns, with a focus on identifying stocks expected to outperform regardless of sector or macro exposure [24][26] - The list's hit rate, which measures the percentage of stocks outperforming the benchmark, stands at 46% relative to the S&P 500 [32] Changes in the Conviction List - **Added**: Broadcom (AVGO) and Dick's Sporting Goods (DKS) [34] - **Removed**: Capital One Financial (COF), Cadence Design Systems (CDNS), and Houlihan Lokey (HLI) [35] Stock Performance - DKS has a price target of $285, representing a 42% upside from its current price of $200 [3] - AVGO has a price target of $450, indicating a 29% upside from its current price of $348 [3] This summary encapsulates the key points from the conference call, highlighting the companies involved, core insights, and additional important themes and performance metrics.

Core Viewpoint - Nike (NKE) maintains a strong brand and market share in the footwear and apparel sector, despite facing challenges such as tariffs and increased competition [1][2]. Group 1: Valuation and Market Dynamics - Historically, Nike enjoyed a significant valuation premium, which has diminished due to rising tariffs and industry headwinds, leading to investor concerns about the brand's future [2]. - A recent $3 million stock purchase of NKE by Apple CEO Tim Cook suggests that influential investors may see potential value in Nike, despite its recent stock performance [3][4]. Group 2: Financial Performance and Future Outlook - Nike's stock has declined by 15% year-to-date, which may attract investors looking for opportunities in undervalued stocks [4]. - The company possesses strong pricing power, allowing it to maintain high margins through special releases and new product lines, which supports its operational model [5]. - Continued trends in pricing power and product development are expected to enhance Nike's margins and overall earnings growth, potentially making the stock a bargain at around 35 times earnings [6].

Core Viewpoint - Nike is positioned to recover and improve its market share, particularly in the sneaker category, following a significant stock purchase by Apple CEO Tim Cook, indicating confidence in the brand's future [1][2]. Company Analysis - Tim Cook's $3 million investment in Nike has boosted optimism around the stock, reflecting confidence in Nike's recovery strategy [1][2]. - Nike has lost market share to competitors like Hoka but is expected to regain its footing under the leadership of its new CEO, who has extensive experience within the company [2][3]. - The new CEO is focusing on fixing product issues and balancing distribution, which is already showing positive results in North America [3]. - Despite challenges in the Chinese market, where EBIT was down 50%, there are expectations for improvement in the long term as comparisons become easier over the next four quarters [5]. Competitive Landscape - Nike remains the number one player in the footwear market, which consists of only ten significant companies, giving it a competitive edge despite recent market share losses [7]. - The apparel sector poses a challenge for competitors like Lululemon, which must contend with a broader range of competitors beyond just athletic brands [9]. - Nike's strong brand position and limited competition in the sneaker category provide a solid foundation for recovery and growth in 2026 [9][10]. Strategic Insights - Nike can leverage its historical playbook, which has proven effective in past recoveries, focusing on product innovation, marketing, and distribution strategies [12]. - The company is expected to benefit from easy comparisons in the coming years, enhancing its market position as it addresses current challenges [9][12].

Core Insights - Nike is experiencing a decline in its cultural relevance in the Chinese sneaker market, leading to a 9% drop in stock after disappointing Q2 fiscal results [1][2] - Sales in Greater China fell by 17% to $1.42 billion, contrasting with a 9% increase in North America sales to $5.63 billion [1] Company Strategy - Nike's CEO acknowledged the need to "reset" the company's approach to the China marketplace, emphasizing the urgency of addressing lagging areas, particularly in China [2][5] - The company has made some progress in reducing promotions and improving inventory management, but deeper cultural challenges remain [6] Cultural Relevance - Analysts highlight a "systemic cultural lag," indicating that Nike must move beyond traditional sports marketing to connect with the cultural values and lifestyle aspirations of China's younger generation [7] - The rise of the "Guochao" movement, which celebrates Chinese heritage, has led younger consumers to favor local brands like Anta and Li-Ning, which create culturally relevant campaigns [7][8] Competitive Landscape - Local competitors are successfully engaging younger consumers through culturally relevant marketing and digital experiences, while Nike's messaging feels outdated [8][9] - Geopolitical tensions are also influencing consumer preferences, pushing them towards domestic brands [9] Digital Engagement - Nike is lagging in digital engagement, relying on traditional marketing channels, which limits its visibility among Gen Z shoppers who prefer discovering brands through apps and marketplaces [10][11] - Rivals like Lululemon and Adidas are leveraging local collaborations and community engagement to connect with consumers more effectively [10]