00:00And I think there's still still fair to say there and turn around what really spooked investors was they shared
00:05that the outlook for revenue for the year is just much lower than the street expected.
00:11They're still having challenges with Converse.
00:13They're now seeing some challenges in EMEA, and that's offset some of the gains in North America and in the
00:19running category.
00:20Lily, talk to us about the inventories, because I know that was a big issue for this company.
00:24Hey, let us just kind of get through weaning down our inventory and then we'll be in good shape.
00:29Great. I thought they were making progress there.
00:31And I think I probably I'm probably representing the market here because the market, I guess, was surprised here.
00:36Talk to us about inventory.
00:37Yeah. So one place that inventories came up this quarter that was interesting is they said that they're seeing some
00:42elevated inventories in EMEA, in Europe, in the Middle East.
00:47And they're also seeing some traffic disruption there from the war.
00:52What is it specifically with China that's been an issue?
00:55Because inventories has been a problem there, but it goes beyond that.
00:59I mean, it goes to a weakness in consumer spending and rising competition.
01:04But Nike has been really struggling to get its China business, its greater China business back to what it was.
01:11Yeah, exactly. So I would say it's, you know, a lot of increased competition there.
01:16And this quarter, they did show some improvement in greater China.
01:19I think, you know, things turned around a little bit more than was expected, but still not enough to excite
01:26investors.
01:28And one area that's really been weak for Nike is Converse.
01:33I don't know about you, but I love Converse sneakers, but I'm also old.
01:36Yep, exactly. And Converse sales fell more than expected.
01:40I think you have something like a 15-year low in your stories.
01:44What is going on there? Because it has attracted some interest.
01:48Yeah, so Converse has been one of the most stubborn parts of the business to turn around under Elliott Hill.
01:55So I think, you know, Nike has really relied on Converse for the Chuck Taylor, but has struggled to diversify
02:02outside of that.
02:03So they're trying to make a basketball push, but, you know, we're not seeing a lot of progress in that
02:07area.
02:09And, you know, we reported yesterday that they, you know, Authentic Brands has expressed some interest in Converse.
02:16So we'll see what happens there.
02:19Nike has said, you know, they're still invested in Converse, but it hasn't turned around yet.
02:25You know, it's, Lily, just for Nike overall, when I think of them, I think of them as just one
02:29of the great consumer product brands with just the, you know, the coolest cutting-edge, leading-edge kind of products.
02:38It feels like maybe they've lost that.
02:41I mean, how concerned are people that they've just kind of lost the feel for the market?
02:46Yeah, I mean, I think innovation was definitely a concern prior to Elliott joining.
02:52So under John Donahue, one of the biggest concerns was there was a lack of innovation.
02:57Nike was relying too much on some of their lifestyle products.
03:00So on the Dunks, the Air Jordan ones, the Air Force ones.
03:03And Elliott has really refocused the business around sport, and he's been trying to innovate in that category.
03:09Nike had some new product come out around the Olympics.
03:12So I think that's an area to watch closely, you know, seeing how much innovation they're able to pump out.
03:19And speaking of Elliott Hill, he's been on the job for now one and a half years.
03:23Does he own everything that's happened, or does he still get a little bit of a pass?
03:27I mean, I imagine that it's frustrating for investors.
03:30It's frustrating for him as well to kind of see this stop-and-start progress.
03:34Yeah, so I think that in one of our stories today, we said that shares are down more than 35
03:40% since he started, despite him executing a new strategy.
03:45He, you know, on a call with employees, you know, said he was so tired, you know, of talking about
03:52fixing the business.
03:53I think he's definitely starting, it seems like he's starting to feel some of the frustration there, the business not
03:58turning around.
Comments