Nike Inc.

[Bibi]

I wont buy it. I cannot imagine once tightened, the sensors become faulty and I will have hard time removing the shoes.

[learntoinvest2022]

Is Nike a good hedge in the current economic climate?

When the Yeezys first came out in 2016, I was one of the folks that lined up outside the store to acquire a pair. It was a terrific side income for me at the time because each pair could easily be “flipped” – resale for 2x–3x its retail price. Personally, I am a fan of sneakers since a great pair of shoes can be worn with any outfit you choose.

Nike and Adidas are the two footwear companies that come to mind. Since forever, these two renowned global firms from two separate continents – the United States and Europe have been hot favorites in the sectors of footwear and sportswear. Although these two firms appear to have identical business plans, there are significant variations between them.

Nike is today’s world’s most valuable apparel brand, with a market capitalization of $189 billion (as of 10th June 2022). Nike does have its fair share of criticisms – labor conditions, environmental impact, and animal welfare. With the recent tech sell-off, Nike dropped over 40%, could this be a potential opportunity to buy Nike stock?

Let’s take a look at what Nike has to offer. Let’s find out!
https://learntoinvests.com/nike-stock-analysis/

[EnSabahNur]

John Hempton wrote about Hibbett and the business of selling sneakers in general.

Filing it here because it involves Nike and I am not sure if we should start a new thread on a thinly followed stock
https://johnhempton.substack.com/p/hibbe...stock-note

My summary here:
https://adragonhoard.blogspot.com/2024/0...s-and.html

[weijian]

Hi EnSabahNur,

I have read this blog post 1-2 weeks ago and think it is still sufficiently relevant. Nike's change of distribution strategy is good learning and I re-produce it as below. Good learning for those vested in more popular stocks in this forum (eg. THG)

We also (randomly) met a Nike executive on the train from Amsterdam to Paris. His responsibility was small distributors in a largish part of Europe. His remit was clear – he was to kill any retailer who was not additive to Nike’s brand – and he was to shower with love a retailer who was additive to the brand. He could organize one-off drops of rare shoes for a special retailer. What he wanted was a retailer that approached important and style-setting niche markets – and his example would be say a skateboard shop that ran skateboard lessons for both elite skaters and 15-year-old girls.

Moderator

[EnSabahNur]

That is a very good extract and the relationship to THG (and similar) kind of business.

I am not familiar enough with the sneakers business but what Nike was able to do to retailers is a little chilling. They can literally change the economic fortunes of hundreds of businesses. A very good lesson for business analysis.

Btw, is THG in the same position as Hibbett or Footlocker or something else in this? I would guess that it is a Hibbett because in the THG thread, somebody mentioned their willingness to invest in shop spaces to drive sales.
Curious to hear any thoughts, in case you have some familiarity with this kind of businesses.
thanks.

[EnSabahNur]

https://sg.finance.yahoo.com/news/britis...48205.html

By Yadarisa Shabong

(Reuters) -JD Sports Fashion has proposed to buy American athletic fashion retailer Hibbett Inc for about $1.08 billion, the companies said on Tuesday, as Britain's biggest sportswear retailer looks to expand across the southeastern U.S.
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JD Sports will pay $87.50 per Hibbett share in cash, representing a premium of about 20% to the U.S. firm's last closing price.

According to Librarian Capital's Thread post, Bronte was buying at below 40 dollars. So this is probably a good result for John Hempton

https://www.threads.net/@librarian.capit...6GOoviAZaG

[weijian]

Nike's share price has dropped close to 50% since its covid-19 and stimulus fueled Nike's customer spending tentancies. It is currently at a level not seen since March 2020 lows.

Nike: An Epic Saga of Value Destruction

In 2008, year of the Olympic Games in Beijing, as part of the brand campaign for the Olympics, Nike enchanted the planet with the “Human Race”, a massive global event and campaign, from LA to Rio, from Rome to Seoul, from Tokyo to Istanbul, from Paris to London, that made the world run. In 2024, year of the Olympic Games in Paris, as part of the brand campaign for the Olympics, Nike EMEA has just launched “Defy the Distance: Nike Running Challenge”, a sort of digital activation to let consumers win a 20% discount on full price products if they run 5k.

https://www.linkedin.com/pulse/nike-epic...nco-llplf/

P.S. A 20% discount if one runs 5k sounds just about what the Spore Gov agency HPB will do. Did they hire the same behaviorial scientists?

[weijian]

So, Nike's BOD hired a tech guy to helm Nike - You get what you wanted - someone who put digital as the destination, not the strategy to reach the destination. The recent 6day MRT breakdown conveniently reminded me of the once-upon-a-time SMRT BOD hiring Cleopatra Saw to head SMRT. Saw did her job and expanded SMRT commercial profits by leaps and bounds, exactly what the BOD wanted her to do.

On hindsight, Nike BOD weren't immune to the halo effects of "tech is eating the world". Just like Bill Ackman hiring an ex (successful) Apple executive to head JC Penny.

Just do it! Brand Name Lessons from Nike's Troubles

Clearly, the company is taking the decline seriously, bringing back a Nike employee of long standing in Elliott Hill to replace John Donahoe, who cut his teeth in tech companies (ServiceNow, eBay and PayPal).

https://aswathdamodaran.substack.com/p/j...ssons-from