Nike looks to clear some hurdles and hit its stride

Navigating a new era in sneakers may not be as easy as “just doing it.”

In one sense, the Nike brand feels strong as ever. We’re watching movies about Air Jordan’s origin story; revenue in fiscal 2023, up 10% to $51.2B, passed the $50B mark for the first time.

Nike and S&P performance over time

But dig deeper and you’ll see a sneaker behemoth trying to find its footing.

Nike’s new balance sheet

In 2020, Air Jordan 1 Highs were reselling for a 61% premium and Nike’s stock was standing tall. Today, those Jordans are being discounted and the stock is down ~40% from its peak.

Net income fell 16% in fiscal 2023, and margins fell slightly as input costs rose. The company’s 2024 outlook came in lower than hoped. Fewer Wall Street analysts are recommending the stock, per Bloomberg.

One challenge: managing and maximizing Nike’s $8.5B worth of inventory, up 23% from 2021.

Sole mates

Another challenge is the continued onslaught of ugly European sneakers.

  • Hoka — acquired by Deckers Brands, owner of Ugg and Teva, in 2012 for a reported $1.1m — now generates $1.4B annually.
  • Ski boot maker-turned-trendy footwear brand Salomon led the 2022 list of fastest-growing brands on StockX, up ~2.3k%. Hoka came in second, up 713%.
  • Swiss brand On grew revenue 69% last year to $1.3B and expects to hit $1.8B+ this year.

Changes afoot: Nike restructured its executive suite in May to “deliver breakthrough innovation,” so a new era of ambitious Nike products may soon be upon us.

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Topics: Clothing

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