'Nike hasn't innovated' and faces challenges to regain growth, says Stacey's Widlitz

Welcome back Shares of Nike are in freefall after they missed on revenue last night and cut their full year earnings guidance. The shares, down 20%, are on pace for their worst day ever as a publicly traded company. Management saying sales are expected to fall 10% in the current quarter due to softer sales in China and uneven consumer trends around the world. My next guest believes Nike has some seriously large shoes to fill if they plan to return to growth in the near future. Stacy Widlitz is here. She's founder of Southwest retail Advisor. Stacy, it's great to see you. I wish it were on better news. But for everyone who is watching the debate and not digging through these results, what the heck happened? Yeah. You know, the title of our note was from swish to swish. And, you know, we weren't kidding. I mean, they they're getting it in all fronts. And I think the big but the overriding theme is that Nike hasn't innovative and now they're talking about pulling forward innovation, which is great. But in the past when they have kind of gotten their innovation back, it was different. We're in a new environment. We've got all of these serious competitors that we haven't had in the past like Hoka and New Balances back in ASICS and on running. So it's harder to come back from here. And I think the biggest challenge for them is that their DTC is down high single digits and now their wholesale business is positive, which just a negative margin shift on top of the fact that they're promoting to move punch right now. Let me play to remind people what Matt Boss said yesterday. This was again before Nike wasn't about any particular company. It's kind of about what's happening with retail more broadly. Let's take a quick listen. The backdrop that we see from a macro perspective based on our work is a selective recession. And what that means is you are going to have extreme volatility. Well, and, and, and don't we ever have extreme volatility? So let me put it this way. Can Nike in a way blame its problems on a bad macro? Or is is bad macro more important than DTC and China and all the rest of it? What do you think is the explanation here? Nike cannot blame this on bad macro if you look at what the competitors are doing. And let's not talk about the new shiny new competitors like On and Hookah. Let's talk about Adidas who double digit sales increases in stores and online gross margins up 500 basis points year over year because they're selling increasingly full price. Opposite situation with Nike here. And even across the spectrum of retail it's the have and have nots. H&M was terrible yesterday, yet into text is up double digits and their business accelerated in June. So it's about the winners and the losers. And I don't think you can just point to the macro and say, hey, you know, look over there. That's an excellent, excellent point. So what do you do now with the stock quickly? You know, I think they're talking about Q1 down 10% the year down mid single digit revenues. I think it could be bumpier than that. I really do. I mean, they're talking about innovation, but we have to see it the customers starting to get used to them promoting again, it's hard to bring them back. So I think this could be a very bumpy Rd. back and I think earnings estimates could have to come down again. You, it's funny, we were just having this conversation Offset, could you buy on or the owner of Hoka Deckers, these these stocks, are they Abercrombie, I don't know or are they already too rich do you think? I think it depends on the name. You know, if you look at Abercrombie Hollister, So we have some proprietary data and promotions actually just got a little bit better here. Abercrombie is not promoting at all. Same thing about anthropology on running lower promotions year over year. So as long as that keeps going and they're not related to promotions, I think you can still own them. And by the way, brands are citing the customer is not digging for promotions. They're happy to pay full price. Footlocker's business got better during the quarter as they pulled back on promotions. So you can't point to that. You can't point to driving promotions as the leader. And that means Nike has some big, big. It's like Nike's down, Lulu's down, Starbucks is down. Everything I knew for the past 15 years is out. It's a new world, new economy. Stacy, thanks for joining us. We really appreciate it.