Nike Shares Sink After Warning About Sales

When it comes to Nike, we know the Jordan brand is doing fairly well, but it's a premium offering and Nike can't just take that and run with it completely. What is the growth story here? What is the growth strategy for Nike given that quarterly sales fell short of estimates and revenues you expect to increase only 1% for the full year? Yeah, it's a great question and it's something we're asking ourselves then and we're going to listen for in the in the call. You know, we're really worried that the company it just doesn't have the next leg of growth and we're just, you know, the valuation is trades at 25 times earnings and it typically over the last few years it traded well above 30. But we don't think that valuation is fair anymore. We just don't see, you know, significant double digit growth from the company. And of course, we've been talking about how Nike shifted its distribution to really focus more on its own branded stores and its own website and removing some of those third party distributors. Now it's gone back in the other direction because it became clear that old rivals and new rivals kind of, you know, sucked up the oxygen in its absence. How hard will it be to repair some of those relationships? Yeah, You know, we think, you know, their strategy, I think is still working. I think direct to consumer is still the way to go for them. You know, it doesn't make up over, you know, some of these other companies have 50 plus percent direct to consumer revenue, whereas Nike, you know, typically is, you know, in the 30 to 40% range. So, you know, we think that that's still probably the best direction for them. We think there's still room to grow there, you know, with, you know, when it comes to like Foot Locker and some of these other wholesalers like Dicks, you know, we think, you know, that's probably, they're going to probably go back into those stores a little bit. But you know, we really think over the next 10 years, Nike's going to really expand that direct to consumer, push the e-commerce platform that they've built out and we think that'll benefit their margins. I I mean, and it's, I mean, look, I mean, whatever softness they're having right there on that direct to consumer side, I think most of us can agree. It was obviously a very present when they launched that ahead of its time really. And it's obviously going to be a fixture. But as you know, Zach, it also has to do with the products they put out there, innovation. And the biggest criticism that we've heard from investors and to a certain extent from consumers alike is that it's just the same old stuff, man. I mean, when do we get, I guess, something that's a little bit, I guess more tantalizing? Is that going to matter? Well, that's exactly right. You know, we're waiting on the call. We've, you know, we've gone back and forth from sales and holes over the past year or two and just we just we're trying to figure out what's next for them. You know, they've had these competitors, Hoka and, and on brand and they've done really well. They've seen, you know, you've seen them grow significantly over the past few years, obviously from a, you know, much smaller base, but you know, it's, it's interesting, you know, this is the first real time that you're seeing Nike really struggle with competition. You know, I go out, you know, I go for a run or I'm at the park. You know, 50% of people are wearing Hoka now and it's just, and it's and overseas it's more on brand. But you know, it's, it's very interesting. You know, this is the first time you're seeing this from this company because for so long they were really they were staple growth brand. You know, they were able to grow in China, which you know, 3% growth just this quarter and for the year, you know, it's not much. And so you know, kind of what's next for them. Exactly right.