What's Gone Wrong With Nike?

Summary

• Nike is in a protracted turnaround, with a revenue outlook for the year significantly lower than street expectations, spooking investors.
• Revenue is expected to decline 2-4% in the current quarter and be down low single-digits for the rest of the calendar year.
• Elevated inventories in Europe and the Middle East, compounded by traffic disruption from war, are creating headwinds.
• Greater China business shows slight improvement but remains weak due to increased competition and soft consumer spending.
• Converse sales fell more than expected, hitting a 15-year low, with struggles to diversify beyond the Chuck Taylor line.
• Authentic Brands has expressed interest in Converse, though Nike remains invested in the brand.
• Innovation was a concern under previous CEO John Donahoe, but current CEO Elliot Hill is refocusing on sport and innovation, with new products tied to the Olympics.
• Shares have declined over 35% since Hill took over 1.5 years ago, reflecting slow progress and investor frustration.
• North America and the running category are performing well, but global challenges overshadow these gains.