00:00The company is still under a turnaround. North America is back on its feet. We're expecting
00:05positive sales when they report this evening. However, the rest of the world is not. Notably
00:10China, where we're expecting a high teens sales decline when they report. The China focus is the
00:17largest focus when they report earnings. When will China turn is the biggest question. We don't think
00:23it'll turn anytime soon, but we do think that they'll make progress over their fiscal 2027 year
00:29and hopefully in 12 months it will be in the same place as North America is today.
00:34Poonam, talk to us about Nike as it pertains to the World Cup. Are they still sort of the force
00:41they once were when it comes to this sport? So they are. I'd say they're on equal grounds
00:48with Adidas, with the exception that Adidas has the ball. So they do have some elevation to Nike
00:55when it comes to the World Cup. You know, when you think of Nike, the World Cup has become
01:00more adjacent to when you think of Nike than I'd say it was in the past where you would
01:05associate Nike more with basketball. Adidas has definitely lost some share over the prior years
01:11before the current CEO to Nike. Right now I'd say they're neck and neck and they're definitely still
01:17in the game. What is the issue for Nike in China? What's going on over there?
01:25So there's a lot happening in China that they need to fix. The first thing that they need to fix
01:29is
01:29the inventory. There's too much inventory on the floor in China. They need to do exactly what they
01:35did in the US, which is clear that inventory, get it out of the market, and then bring in more
01:40new
01:40inventory that resonates with the consumer that's seen to be more what the consumer wants. How they
01:47do that in the US when they did that, they did it more through their direct to consumer channels,
01:52which is probably the right approach. And the second thing that they need to do is cut back
01:56on the discounting. For the longest time in China, Nike has been seen as a discount brand. And that's
02:02not the case here. When we think of Nike, we do not think of a discount at leisure brand.
02:07So they need to turn that image and they need to use local endorsers, local athletes,
02:13local celebrities to bring the brand heat back into the China marketplace with the new products
02:18that they launch. Poonam, I'm looking at year-to-date numbers for Nike, and they're not pretty,
02:23down 36%. One-year return, down 42%. The stock is down more than 1% here ahead of its earnings
02:29after
02:30the bell. What do investors need to hear from this company to start to turn the stock around and get
02:36people to want to buy again? I think China. It's a China story. You know, the turnaround is taking a
02:42lot longer than anyone has expected. It is true that they turned the biggest ship around, which is
02:47North America. But China is their most profitable region. And there is no line in sight on when China
02:54will improve. It's still very early days. We're awaiting their investor day in the fall to really
02:59get a better idea of their own outline for the next three to five years. I think right now the
03:06question is, will they still have that investor day? So there's two things that I'm looking for when
03:10they report today. Update on China and an update on their investor day. They just hired a new CFO.
03:17So will that, you know, investors are asking, will they still have their analyst day?
03:22Has Nike lost its mojo in terms of product development, knowing what's hip, what will sell,
03:29all that kind of stuff that I think a lot of people associate with the brand?
03:33I don't think it's that Nike's lost its mojo. I think that like Nike has allowed competition to
03:38encryption their space and now they have to win it back. Whereas before they just had it. So they
03:44definitely are pressing the pedal on innovation. We do see that what they're launching is working and
03:49it's doing really well. They just have to move faster.
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