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Yahoo
4 days ago
- 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
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
