Nike’s Reality Check

Hello and welcome to the debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondence you created them. I'm Executive Editor Brian Baskin, and I'm Senior correspondent Sheena Butler-Yon. When Elliot Hill took the helmet Nike in October 2024, he inherited a company in the midst

of one of its worst slumps in years. A long time Nike Insider, he'll return with both credibility and a daunting turnaround ahead. His early move centered on refocusing the business on sport and rebuilding relationships

with wholesale partners and they seem to show some traction. But the markets response to Nike's latest earnings suggests that confidence in the brand is now in short supply. I actually got a note from an analyst right before we recorded this with the subject

line rearranging the deck chairs, which is not a good sign. But with Nike, the question is never about capability. The brand still has product, innovation, and unmatched scale. What it hasn't fully regained is a clear, compelling narrative.

One that convinces consumers and investors that the next chapter is really worth buying into. Today, we're joined by BOS Mike Sykes to unpack why Nike's recovery feels unfinished. What the brand is doing to win back public opinion, and what it would take to make people

believe again. Welcome to the debrief. Thanks for having me. It's good to be back. So Mike, let's start with the basic disconnect that's at the heart of your latest story. So Nike, it's CEO,

Elliott Hill, said the company is it's seeing its foundation get stronger, but the stock market is looking at something else. Why didn't investors react the way they did on the heels of these recent results, which which was a really significant sell-off? What was the reason? It seems to me that investors are just sort of running thin running a little thin on on patients

with Elliott Hill, it's like Nike continues to preach that the comeback that it's been, you know, saying it's coming for now a year and half at this point is on the cusp and it's been there for all this time and and they're just seems to be a little bit of investors are

just like I said, they're just losing patience. You got Elliott Hill talking about how they have wins in North America and running and wholesale. And these are like small points that that do matter ultimately, but they don't really reflect that well in the brand's bigger picture at that's not at this point anyway.

And just to add some context here, we're talking about the company's fiscal third quarter results, which came out earlier in April. And they showed that revenue was basically flat on the year. And you know, within it, there were some wins like wholesale, like you mentioned, But it seemed like that just wasn't enough.

And I guess just to follow up on Sheena's question, it's not like these results were so out of step with what they've been reporting for the last year or so. And why did suddenly investors decide,

you know, we can't accept flat sales anymore? Again, I think it is just a matter of investors deciding that this is the moment where, you know, you got, for the second quarter,

Ernest called Elliott Hill was saying that they were in the middle innings. And so when you get to the third quarter, it's like, okay, if we were in middle innings, then,

then where are we right now? Can't still be the middle innings. And we can't still have these, these same issues that we were talking about three months ago

that are still problems right now. And, you know, whether that's fair or not, is I guess not really up to me to judge is sort of an investor thing and how they feel.

But it, to me, it is very clear that people are sort of a bit on edge. And I think what also contributes to that a bit here is the fact that there are so many elements that are out of Nike's control through, you know, geopolitical unrest and uncertainty

when it comes to tears and things like that. It's like there's so many things that they can't control and the things that they can control are not looking, I guess, more positive than people anticipated to this point than And it's like why should we believe in this company move forward through this next

quarter, especially when they're telling you and in the fourth quarter, like our numbers are going to be down low single digits. Like that's just not, you can't really get ring endorsements from people when you're talking like that.

Yeah, it seems like that's the other component here is their outlook wasn't showing that there was going to be any growth in the near future. So to extend that tortured baseball metaphor that that that Elliott Hill had kicked off, look at who's on deck and there's nothing there that says, okay, this is how they're

going to pull it off. Or is there? I mean, to me, I think there are things there that I would say are definitely more positive than I thought they would be. Like, to Elliott Hills Point, I guess, like, I did not foresee their business in North America doing as well as it is right now. And I do think that the

the decision to sort of rebuild their relationships with whole sellers. It's a part of that. And I think that is a big positive for the company

to build on. And I do think that they are trying new things and new spaces where people have asked them to try things. Like everybody likes the point to running

as sort of Nike's baseline. That's like the first thing that Nike was ever really good at is running, right? So for the company to return to its previous self,

they need to be good at that again. And I think Mikey is legitimately gotten good at running. Again, like that's a positive category for the brand now. And so when you look at those things,

there's promise there, right? Whether that's enough is again, not up to me, but there is something to hang your head on. So you know, the interesting thing I always say

when we talk about Nike is that we have to always put in the context of what does a Nike grade problem look like.