Tag #Distribution Strategy

"What are the primary factors contributing to Nike's recent underperformance, and what are their immediate consequences for the company's financial health?"

"Nike's stock has underperformed for three years, with revenue mildly increasing but margins dropping from 17% to over 10%, resulting in flat EPS compared to 2021. The company withdrew its FY25 guidance due to ongoing challenges, raising investor concerns. This underperformance is unusual for Nike.","Nike faces challenges from a distribution revamp, shifting to a direct-to-consumer model that alienated some wholesale partners and created opportunities for competitors like Asics and Hoka. A change to a gender-led product strategy from a category-led one also hurt market share in men's running, while backlash in China further impacted sales.","Despite these challenges, Nike's Schiller P/E ratio is near a 15-year low, and its dividend yield is near a 15-year high, suggesting undervaluation. The company's share repurchase program adds further support, indicating potential for patient investors."