Latest news with #NIKEDigital
Yahoo
05-06-2025
- Business
- Yahoo
NIKE Bets Big on Digital: Will It Deliver Sustainable Growth?
NIKE Inc. NKE remains a digital heavyweight, especially in key markets. It holds a top-three position in global online athleticwear sales, and its digital ecosystem reaches consumers in nearly 190 countries. The company is doubling down on digital transformation as a central pillar of its turnaround strategy, revamping its go-to-market approach, enhancing product storytelling and building premium experiences across both digital platforms and physical stores. NIKE's digital investments are focused on direct-to-consumer (DTC) models, data analytics and AI-driven personalization, aiming to create a more personalized, connected and seamless experience for its customers. The company is repositioning NIKE Digital as a premium, full-price channel, drastically reducing promotions and improving storytelling across its online platforms. Initiatives like 'zero promotional days' in North America and enhanced user experiences are early steps to regain brand heat and margin a result of these shifts, combined with a pullback in paid media, management expects digital traffic to decline double-digits in fiscal 2026. Our model projects NIKE's digital revenues to decline 1.3% in fiscal 2025 and 2% in fiscal 2026, reflecting the near-term impact of this strategic reset before the benefits of full-price positioning third-quarter fiscal 2025, NIKE Digital sales slipped 15% year over year, contributing to a 10% drop in overall Nike DTC revenues. The company attributes this decline to its intentional reduction in promotional activity, cutting North America digital promotional days from more than 30 to zero year over year. While this has impacted near-term demand, NIKE is focused on repositioning its digital channel as a full-price, premium experience. Despite the dip, digital still represents a large portion of NIKE's DTC business, which accounts for about 40% of total revenues globally, a significant indicator of its strategic importance. Looking ahead, NIKE's digital ambition is not just about sales, but shaping culture and capturing the consumer where they are. With strong early results from digital-led product drops like the Vomero 18 and Peg Premium, and the upcoming NikeSKIMS launch, NIKE is betting big on storytelling, innovation and personalization to reassert its dominance. The company's vision suggests that digital will be the arena where product energy meets consumer passion—delivered at scale, but curated with intent. lululemon athletica inc. LULU and adidas AG ADDYY are the major companies competing with NIKE in the digital a key competitor to NIKE in the athleisure space, has built a strong digital business that accounted for more than 40% of its total revenues in recent quarters. The brand maintains a robust digital footprint, supported by a seamless omnichannel experience and a loyal customer base. lululemon's digital market share in the U.S. activewear and athleisure segment has steadily expanded, particularly among higher-income female consumers - a segment where NIKE also competes. The company has leaned into personalized shopping experiences, rapid delivery, and community-driven digital engagement through its Lululemon Studio platform. While NIKE dominates in sport-performance categories, lululemon's digital business increasingly overlaps with NIKE's, especially in women's training, yoga and lifestyle apparel. This intensifying rivalry is most evident in North America, where both brands are doubling down on digital engagement and brand is reshaping its digital business, which now accounts for 20–25% of total sales, with a goal to reach 50% via DTC by 2025. The company's digital footprint spans global e-commerce, mobile apps and a strong presence on third-party platforms, supported by personalized shopping and the adiClub loyalty program. While NIKE leads in digital scale and innovation, adidas overlaps significantly in categories like sneakers, streetwear and casual sportswear, particularly among Gen Z and fashion-driven consumers. Both brands are heavily invested in key markets like North America and China, with growing competition across performance-running, lifestyle and women's activewear in the digital space. Shares of NIKE have lost around 16.3% year to date against the industry's growth of 16%. Image Source: Zacks Investment Research From a valuation standpoint, NKE trades at a forward price-to-earnings ratio of 29.33X, higher than the industry's average of 20.78X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for NKE's fiscal 2025 and 2026 earnings implies a year-over-year plunge of 46.1% and 8.7%, respectively. The company's earnings per share (EPS) estimate for fiscal 2025 has been on the rise in the past 30 days. Meanwhile, the EPS estimate for fiscal 2026 has moved south in the past 30 days. Image Source: Zacks Investment ResearchNIKE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report Adidas AG (ADDYY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
27-04-2025
- Business
- Yahoo
Despite the challenges NIKE remains committed to drive the growth of sports in China.
Introduction The company's multiyear innovation cycle has been mainly focused on increasing its speed to the consumer. For years, NIKE has used the Express Lane to facilitate short-lead-time replenishment and hyperlocal design, and it expects to continue leveraging this. However, in the past year, NIKE has developed a new approach across the entire product creation process. This is called the Speed Lane, a broader company-wide effort to move faster and be more responsive to the consumer. In the second half of fiscal 2025, the company expects to see additional innovations to be launched from Speed Lane, including several exciting new franchises in fitness and lifestyle. Bull Case Long-Term Playbook: Despite the ongoing challenges, management is on track with its actions to reposition NIKE to be more competitive, and drive sustainable, profitable long-term growth. The company is intensifying its focus on sports, speeding up the introduction and expansion of new products and innovations. NKE is also enhancing its storytelling efforts with greater impact and boldness while elevating the overall marketplace to strengthen brand distinction and align with consumer preferences. Additionally, the company is accelerating its innovation pipeline, advancing several innovations. It is taking bold steps to reclaim its leading edge in innovation. Focus on its sports performance product category has been the key to its strategy. Strategic Actions on Track: Elliott has laid out a series of strategic actions to reposition the business and revitalize the momentum of the NIKE brand through sport. Some of these initiatives are already in progress, and the company is accelerating implementation while others are newly introduced. Notably, NIKE is transitioning its digital platform to a full-price model and reducing the reliance on promotional activity. Concurrently, the company is scaling back its investment in performance marketing, which will reduce paid traffic. Plans for NIKE Digital: CEO Elliot noted that traffic in NIKE Direct, both online and in physical stores, has declined due to a lack of product innovation and inspiring narratives. This has led to an over-reliance on promotions. The company has shifted to a pushed model, with digital platforms showing a near 50-50 split between full-price and promotional sales at the start of fiscal 2025. NIKE Digital has been capturing demand, but competing with wholesale partners instead of creating new demand for its brands. As a result, the company is refocusing on enhancing the consumer experience, growing organic traffic, and driving full-price sales, as outlined by Elliot. Being a premium brand means focusing on full-price sales, with promotions limited to key retail periods rather than the current frequency. Additionally, NKE will explore using NIKE value stores to clear excess inventory. Strong Financials & Sustained Shareholder Returns: NIKE ended second-quarter fiscal 2025 with strong liquidity, which included cash and short-term investments of $9.8 billion. Its long-term debt of $7.97 billion was almost flat from the prior quarter. For the past 14 years, the company has distributed regular dividends and made share repurchases to improve shareholder returns. In second-quarter fiscal 2025, the company returned $1.6 billion to shareholders, including $1.1 billion in share repurchases and $557 million in dividends. As of Nov. 30, NIKE repurchased 112.8 million shares for $11.3 billion as part of its four-year $18-billion share repurchase program approved in June 2022. NIKE has a dividend payout ratio of 38%, annualized dividend yield of 2.2% and free cash flow yield of 5.2%. Bear Case Shares Decline, Appear Overvalued: Shares of NKE lost 29% in the past year compared with the industry's decline of 22.3%. NIKE's dismal share performance indicates ongoing challenges for the company, further highlighted by its disappointing second-quarter fiscal 2025 results. In the quarter, NIKE faced continued pressure from weak sales in its lifestyle segment, declining digital revenues, and challenges in the Greater China market, leading to slower revenue growth and squeezed profit margins. Considering price-to-earnings (P/E) ratio, NIKE looks overvalued compared with the industry. The stock has a trailing 12-month P/E ratio of 32.86X, which is above the median level of 25.97X but below the high level of 36.15X, scaled in the past year. On the contrary, the trailing 12-month P/E ratio is 26.17X for the industry. Given these factors, we believe that the stock is quite stretched from the P/E aspect. Franchise Management Actions: NKE has experienced sluggish sales trends in its lifestyle segment, including men's, women's, and Jordan. As outlined in first-quarter fiscal 2025, the company is progressing with its plans to adjust timelines and reduce the overall supply of select classic footwear franchises across various channels. NIKE is focused on recalibrating these franchises within NIKE Digital, where they hold the largest share of business. However, these strategic actions are expected to impact certain business aspects, creating short-term revenue headwinds in fiscal 2025. In the second quarter of fiscal 2025, the company advanced its efforts to shift its product portfolio by reducing reliance on its classic footwear franchises. These franchises continued to decline at a rate faster than the overall business, with a more pronounced slowdown compared to the first quarter. As a result, the company's second-quarter fiscal 2025 sales were impacted by ongoing headwinds from its franchise management actions, which led to year-over-year revenue declines of 8% on a reported basis and 9% on a currency-neutral basis. The company continues to see significant reductions in its classic footwear franchises through NIKE Direct, which declined 13% on a reported basis and 14% on a currency-neutral basis, including a 21% drop in NIKE Digital and a 2% decrease in NIKE Stores. Wholesale also experienced a 3% decline year over year on a reported basis and 4% decline on a currency-neutral basis. Marketplace trends in the fiscal second quarter mirrored the challenges previously highlighted, as traffic and retail sales fell short of expectations, particularly in September and October. However, November brought a positive shift, with digital and in-store traffic gaining momentum, especially during key consumer events such as Black Friday week, signaling improved performance in critical periods. China Business in Jeopardy: NIKE's business in Greater China has been a focal point for its global strategy, reflecting significant opportunities and challenges. Recent trends reveal that the company has been experiencing considerable shifts in consumer traffic in Greater China, with declines in brick-and-mortar traffic and lower sell-through rates. Driven by retail traffic declines in a difficult macro environment, revenues in Greater China declined 11% year over year in second-quarter fiscal 2025. NIKE Direct channel revenues in Greater China declined 7%, including an 8% decline in NIKE stores and a 4% decline in NIKE Digital. Wholesale in the region was down 15% year over year. The company also required higher markdown activity to drive sell-through and inventory velocity, negatively impacting gross margins. EBIT in Greater China declined 27% on a reported basis. Amid a competitive landscape, NIKE remains committed to delivering product innovation, inspiring consumers, and driving the growth of sports in China. The company continues to experience strong demand for full-price products, supported by reduced markdowns and higher margins on locally designed express lane offerings. While management anticipates near-term challenges, it highlights the ongoing growth of sports in China. NIKE is actively addressing current headwinds in the region to restore brand momentum and maintain a healthy marketplace. Hedge Fund Bets DCF Conclusion According to Nike's third-quarter fiscal 2025 outlook, Elliott's actions and foreign exchange headwinds will cause a low-double-digit revenue decline. The company anticipates a slight decline in SG&A expenses and a 300350 basis point drop in the gross margin year over year. Between $30 million and $40 million is the estimated range for other revenue and expenses, including net interest income. It is anticipated that the gross margin will drop 300 basis points to 41.8%, while SG&A expenses will drop 2.6% year over year to $4.1 billion. In the fiscal third quarter, SG&A expenses are anticipated to rise by 290 basis points to 36.9%. This article first appeared on GuruFocus.
Yahoo
21-03-2025
- Business
- Yahoo
Nike Inc (NKE) Q3 2025 Earnings Call Highlights: Navigating Revenue Declines and Strategic ...
Revenue: Down 9% on a reported basis and down 7% on a currency-neutral basis. NIKE Direct: Declined 10%, with NIKE Digital down 15% and NIKE stores down 2%. Wholesale: Down 4%, largely due to declines in Greater China. Gross Margin: Declined 330 basis points to 41.5% on a reported basis. SG&A Expenses: Down 8% on a reported basis. Effective Tax Rate: 5.9%, compared to 16.5% for the same period last year. Earnings Per Share (EPS): $0.54. Inventory: Declined 2% versus the prior year. North America Revenue: Declined 4%, with NIKE Direct down 10% and Wholesale up 3%. EMEA Revenue: Declined 6%, with NIKE Direct down 12% and Wholesale down 3%. Greater China Revenue: Declined 15%, with NIKE Direct down 11% and Wholesale down 18%. APLA Revenue: Declined 4%, with NIKE Direct down 4% and Wholesale down 4%. Warning! GuruFocus has detected 4 Warning Sign with FDX. Release Date: March 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Nike Inc (NYSE:NKE) is making significant progress in diversifying its product portfolio, with a focus on performance and sportswear across various categories, including men's, women's, and kids' footwear, apparel, and accessories. The company is actively working to reignite brand momentum through strategic investments in brand marketing and sports marketing, resulting in high single-digit growth in demand creation expenses. Nike Inc (NYSE:NKE) has successfully launched new innovative products like the Peg Premium and Vomero 18, which have shown strong consumer response and sell-through rates. The company is committed to creating a more integrated marketplace, aligning both direct and wholesale channels to provide a consistent consumer experience. Nike Inc (NYSE:NKE) is taking proactive steps to clean up the marketplace, particularly in Greater China, to ensure a healthier inventory and better brand positioning. Nike Inc (NYSE:NKE) reported a 9% decline in revenues on a reported basis and a 7% decline on a currency-neutral basis for the third quarter, reflecting significant headwinds. Gross margins declined by 330 basis points to 41.5% due to higher markdowns, wholesale discounts, and inventory obsolescence. The company is facing challenges in its classic footwear franchises, with double-digit declines impacting overall business performance. Nike Inc (NYSE:NKE) is experiencing elevated inventory levels across all geographies, which are expected to take several quarters to normalize. The company anticipates continued headwinds in revenue and gross margin in the near term, particularly due to the ongoing cleanup of the marketplace and promotional activities. Q: Elliott, can you provide a timeline on when you think classic shoe inventories will be clean in the wholesale channel? And then same question for the direct channel as well. A: Elliott Hill, President and CEO, explained that Nike is focused on rightsizing their classic shoe inventories, particularly Air Force 1, Dunk, and AJ1, rather than sunsetting them. He emphasized the importance of running a balanced and complete portfolio across all brands and categories. By the end of Q4, Nike expects to reduce the contribution of these franchises by 10 percentage points as a percent of their overall footwear mix, with further reductions planned for fiscal year '26. The company is taking actions to clean up the marketplace, including transitioning excess inventory to factory stores and value channels. Q: Elliott, I was hoping to get your latest thoughts on innovation within NIKE. How do you feel about the strength of your innovation team and the pipeline ahead? A: Elliott Hill, President and CEO, expressed confidence in Nike's innovation team and pipeline. He highlighted the long-term innovation efforts at the LeBron James Nike Sports Research Lab and the near-term focus on driving newness and freshness across performance and sportswear categories. Hill mentioned successful innovations like the 24/7 apparel collection and new footwear models such as Vomero 5 and P-6000. He also noted excitement about the upcoming Spring '26 product line. Q: Elliott, based on some of the comments earlier from Matt around performance growth almost offsetting Classics declines, do you expect that inflection point to be in Spring '26? A: Elliott Hill, President and CEO, stated that Nike is gaining confidence in their product pipeline and expects performance growth to offset declines in classic footwear franchises. The key focus is on cleaning up the marketplace to make room for new innovations and ensuring proper presentation at point of sale. Hill emphasized the importance of driving sell-through to support the order book and return to profitable, sustainable growth. Q: Elliot, I'm curious how are you going to balance the promotional? Just like as you think about the presentation and bring out promotions at the same time that it's clear we can hear your excitement around the new product and you're amplifying storytelling. A: Elliott Hill, President and CEO, explained that Nike is moving both digital and physical retail spaces to full price as quickly as possible, using value channels to clear excess inventory. He highlighted successful examples of new product launches like Peg Premium and Vomero 18, which have seen strong sell-through. The focus is on resetting the marketplace to full price and maintaining urgency in the transition. Q: I just wanted to focus on wholesale here. And maybe for Elliott, as you've kind of returned to that channel gotten back in the mix, I'm just curious, your biggest learnings there, any surprises to the upside or downside versus how you've historically operated there with all your knowledge? A: Elliott Hill, President and CEO, noted that Nike had been working too siloed between direct and wholesale channels. He emphasized the need for an integrated, consumer-led marketplace approach. Hill highlighted the importance of working closely with wholesale partners, aligning growth plans, and elevating brand presentation. He expressed confidence in the progress being made and the commitment to rebuilding relationships with wholesale partners. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
