Episode summary
Jordan, Wemby, and Why Nike’s Turnaround Hasn’t Taken Flight | Barron's Streetwise
Barron's Streetwise
· · Hosts: Jack, Andrew Bary
Summary
Nike’s stock decline is framed as a bet that the turnaround will take much longer than Wall Street expected. The host argues that Elliot Hill is already doing many of the right things — refocusing on performance footwear, repairing retailer relationships, and trimming oversupplied franchises like Jordan retros and Dunks — but the market wants faster results than the business can deliver.
The episode centers on two linked problems: Nike has lost some of its cultural and product edge, and it is facing a more difficult competitive landscape. UBS analyst Jay Soul says the company’s old “superpower” was being all things to all people, but that broad appeal can weaken brand definition. He also warns that sportswear has grown too large a share of sales and that Nike’s margin recovery may take five to 10 years, not months.
A separate bull case comes from a money manager who says the U.S. turnaround is already showing signs of working, especially in North America, while China remains the biggest drag. Sneaker reviewers add a more pointed critique: Nike’s retro hype is fading, its takedown models look weaker than before, and rivals like Adidas, New Balance, Hoka, On, and Chinese brands are winning on both performance and availability.
Key takeaways
- The host says Nike’s stock is cheap relative to history, but not cheap enough to make the turnaround an obvious bargain at about 24 times forward earnings.
- Jay Soul of UBS argues Nike’s recovery will take time because the market is expecting a faster turnaround than the brand can realistically deliver.
- Soul says Nike’s margin can recover over a five- to 10-year horizon, but only if the company spends to serve consumers first and shareholders second.
- Chris Rossback of J Stern says Nike’s U.S. business is starting to work, but greater China remains a major headwind and still needs a fix.
- Sneaker reviewer Sean Go says Nike’s basketball appeal is fading because current stars do not have the cultural pull Michael Jordan once had.
- Chris Chase says Chinese brands now compete on quality, and that some Nike takedown models have become weaker than the versions he bought years ago.
Notable quotes
“It's an opportunity to buy one of history's great growth stocks when it's way down. But the problems for Nike might run deeper than they appear”
“And what's amazing about that is no other brand would get more than like 60%. And it's hard to be more than that”
“the turnaround is just that the what's in the stock price is an expectation that turn will happen fast”
“Nike's always been their bread and butter has always been tied to those historical uh retro sneakers, right”
How the episode opens
It's going to take some time. I just think what's happening with the stock price over the last couple years is Wall Street realizing that the turnaround and the the amount of time that Nike needs to get back to being the company that people expected to be is is a lot more than what people thought a year or two years ago.
Hi, it's Jack How and this is the Baron Streetwise podcast. The voice you just heard, that's Jay Soul. He's an analyst at UBS.
He covers footwear. We're talking about Nike. That stock is down from a peak of over $170 a share to a recent price in the 40s.
It's an opportunity to buy one of history's great growth stocks when it's way down. But the problems for Nike might run deeper than they appear. We're going to talk in this episode about why its turnaround has been elusive and why stock buyers should be cautious until they see more signs of progress.
That's next. I am wearing at this moment machine washable sneakers. Not that I have washed them in the machine.
I don't bother because they were so cheap. They were 45 bucks and I have a stack of boxes in my closet. I have about I'm going to say like four pairs lined up for me when this pair gets dirty.
They slip on. I don't have to tie laces. At first I told myself I'll just wear these around the house.
But we're way past that now. I guess I won't tell you the brand, but it makes a statement. And that statement is don't judge me for my fashion because I've clearly given up.
I'm out of the game. I tell you this to say that I'm not the guy to explain the finer points of where Nike is missing on shoe design, but we're going to hear from some people in a minute who can help us with that.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- nike turnaround
- sneaker products
- nba stars
- footwear analyst outlook
Companies and tickers mentioned
- NKE
- Nike
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Barron's Streetwise
-
America’s Debt Reckoning: 5 Paths Forward | Barron's Streetwise -
AI’s Big Payoff? Apollo’s Top Economist Doesn’t See It Yet. -
Does Show Business Still Work? | Barron's Streetwise -
The Disruption Scorecard | Barron's Streetwise -
Spooky Agents, Cable’s Second Death, and Stock Picks | Barron's Streetwise -
Buybacks, Bond Doubts, DRAM, and T-Rex | Barron's Streetwise
Barron's Streetwise, this episode and its artwork belong to Barron's. Octagon is not affiliated with the show; this page is an independent summary.
