Converse - not Nike - takes centre stage at NBA Finals with Thunder star
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However, Nike isn't being completely shut out of the finals. The world's largest sports gear maker acquired Converse in 2003 to bolster its lifestyle business. Since then, Converse has had spurts of success, but growth stalled and revenue has been declining, including an 18% drop in the most recent reported period. It makes up about 4% of Nike's total sales.
Nike Chief Executive Officer Elliott Hill, who came out of retirement last year to try to reverse a lengthy sales slump, recognizes the shoe's importance. In February, Hill flew to San Francisco to be alongside SGA to debut the Shai 001 — his new $130 basketball shoes in buttery yellow.
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Globe and Mail
2 days ago
- Globe and Mail
Can Nike Stock Double a $1,000 Investment in 5 Years?
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These financial metrics are wildly disappointing. With the benefit of hindsight, it becomes very clear what mistakes Nike made to get to this point. The business relied too much on classic footwear franchises, which contributed to a lack of product innovation that drove a loss of customer excitement. On the distribution front, Nike leaned heavily on going direct to the consumer, mainly in e-commerce, alienating retailing partners in the process. And this opened up shelf space to up-and-coming rivals, particularly in the important running category. Fashion is a tough industry to crack. Companies have to work hard to cater to the constantly changing tastes that consumers have. For example, the rise of the athleisure trend was a boon for Lululemon Athletica while spawning new businesses like Alo Yoga and Vuori. It seems more recently, there is growing interest in looser-fitting clothes. Change is the only constant. It is surprising, though, that Nike has taken such a big hit financially. After all, this company has been around for decades, leading the global sportswear market. It should have a better pulse on consumer trends than any business in the industry. But even the best can still run into problems. It's time to focus on the brand Nike possesses one of the world's most iconic brands. I don't believe anyone would disagree here. This brand is precisely what makes up the company's economic moat. It provides a key asset for Nike to focus on. CEO Elliott Hill, who was brought in last year to orchestrate a successful turnaround, is focusing on the right strategic priorities. It's all about getting back to product innovation and meeting customers where they are. Nike recently started selling its products on Amazon again after taking a six-year break from the dominant online marketplace. For what it's worth, Nike still has a leading market share in the worldwide sportswear industry. Its brand, high-visibility athlete endorsements and league partnerships, broad distribution capabilities, and marketing prowess give it the tools it needs to succeed. Nike's path to doubling your money Nike shares are near the cheapest they've been in the past decade, trading at a price-to-earnings (P/E) ratio of 20.9. Expectations are understandably low, but that introduces upside potential. Investors must believe that Nike will get back on track sooner rather than later. And by this, I mean it starts to register solid revenue and EPS growth. Making real progress could take some time, but this is the formula for investment success. I wouldn't be surprised if the stock can double in five years, turning $1,000 into $2,000 by the end of the decade. A cheap starting valuation, coupled with improving fundamentals, can drive huge share-price gains. However, I still think this remains a very risky investment opportunity as the uncertainty is high. 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See the 3 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Lululemon Athletica Inc., and Nike. The Motley Fool has a disclosure policy.
Globe and Mail
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A multibagger in the making John Ballard (Cava Group): If there's a restaurant stock that has the makings of the next Chipotle, it's Cava. With the stock down 28% year to date, investors have a great opportunity to start a position at a more reasonable valuation. The stock's recent dip can be attributed to its steep valuation entering the year, as Cava continues to report strong financial results. The chain is satisfying a healthy appetite for its Mediterranean-based menu. It just opened 15 net new restaurants last quarter, helping to drive revenue up 28% year over year. And it's important to point out that it is seeing strong growth at existing locations. Same-restaurant sales (comps) surged 10.8% year over year, with guest traffic up 7.5%. Cava is nowhere close to reaching its long-term goal of 1,000 restaurants by 2032. It's in only 26 states but already has a solid operating profit margin of 6.6% on a trailing-12-month basis, and that margin should continue to increase as the business scales up and leverages expenses across a larger store base. The strong growth in comps shows that Cava still has a lot of opportunity to increase sales at existing locations and expand brand awareness. The company is delivering a unique restaurant experience that is getting recognition: It was recently ranked No. 13 out of the 50 most innovative companies as chosen by the business publication Fast Company. Analysts expect earnings to grow at an annualized rate of 36%. This should be a multibagger stock as Cava expands to all 50 states. Nike's comeback could finally arrive Jeremy Bowman (Nike): It's hard to call Nike stock magnificent these days. The company has gone through one of its worst periods in its history, due primarily to increasing competition and strategic errors under its former CEO. Revenue is falling by double digits and is now down 65% from its peak in 2021, steadily declining since then. However, Nike is still the largest sportswear brand in the world. It's not going to fade away into irrelevance, and the company has a number of initiatives under new CEO Elliott Hill that should help return it to growth. These include focusing more on innovation and new products, returning to more tried-and-true marketing methods, and reestablishing relationships with wholesalers after overly focusing on the direct-to-consumer channel. Nike will report fiscal fourth-quarter earnings later this month, and any good news could propel the stock higher. Though the company is facing a challenging macroeconomic climate with changing tariff rates, it appears to be regaining market share in running-shoe sales from Deckers' HOKA brand, which reported slowing growth in its recent earnings report. 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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has positions in Amazon, Cava Group, Chipotle Mexican Grill, Meta Platforms, Nike, and Shopify. John Ballard has positions in Cava Group. The Motley Fool has positions in and recommends Amazon, Chipotle Mexican Grill, Deckers Outdoor, Meta Platforms, Nike, and Shopify. The Motley Fool recommends Cava Group and Kraft Heinz and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
CTV News
5 days ago
- CTV News
Lululemon shares tumble as yogawear firm warns tariffs will crimp profit
Lululemon Athletica's LULU.O shares fell 20 per cent in premarket trading on Friday, as the maker of high-end leggings warned that tariff-related costs and uneven demand in key markets of North America and China will dent its profits this year. The Canadian firm, whose popular Align yoga pants sell for up to $128 apiece on its website, will take modest price hikes for a 'small portion of the assortment' and ramp up discounts for the rest of the year, company executives said. Lululemon has struggled to retain shoppers, despite its efforts to introduce fresh styles of sports bras and athletic jackets, as it faces intense competition from trendier and more affordable brands in North America and mainland China. 'Despite (Americas) decline, management continues to prioritize product newness and China expansion over addressing a pullback from core customers and evident traffic declines,' Jefferies analyst Randal Konik said in a note. 'We believe this misalignment is concerning.' Lululemon joins sportswear rivals Nike NKE.N and On ONON.N in raising prices in the U.S. as erratic trade tactics under President Donald Trump rattle global markets and fuel fears of a recession. Lululemon trimmed its 2025 earnings forecast and said it expects margins to come under pressure from the proposed tariffs, which will impact products from some of its largest sourcing hubs in Vietnam, Cambodia and Sri Lanka. 'My sense is that in the U.S., consumers remain cautious right now, and they are being very intentional about their buying decisions,' CEO Calvin McDonald said on a post-earnings call. The company's stock, which is down about 14 per cent this year, was trading at $263.50 before the bell on Friday. The news dragged Nike's shares down 1.3 per cent. At least 12 brokerages cut their price targets on the stock, with slashing it the most, to $303 from $389. Lululemon's forward price-to-earnings multiple, a common benchmark for valuing stocks, is 21.46, compared to that of 31.37 for Nike and 9.54 for Gap GAP.N. (Reporting by Savyata Mishra in Bengaluru; Editing by Shreya Biswas)
