NKE — Nike's Turnaround Efforts Show Mixed Progress

Context from Ask AI thread: Draft an investment thesis in response to this innovation signal: main bull and bear cases, second-order effects, key catalysts, and what would invalidate the view. The article tone is neutral or mixed — still treat the story as a catalyst to stress-test. Innovation Radar category: Analyst Changes. Headline: Nike results tops estimates as turnaround shows uneven progress Indexed excerpt (from publisher feed): NIKE beat expectations for third-quarter earnings on Tuesday, as the sportswear giant's turnaround efforts showed some signs of progress, particularly in its wholesale business, even as weakness in China and margin pressure persisted. Under CEO Elliott Hill, Nike has pulled back promotions, stepped up product innovation and refocused on core franchises such as running as it tries to reset the business after years of excess inventory and uneven demand across North America and China. "The work is not finished, but the direction is clear, our teams are moving with focus and urgency," Hill said. The sportswear retailer's revenue was flat at US$11.28 billion in the quarter ended Feb 28, but came in above analysts' average estimate of a 0.3 per cent drop to US$11.24 billion, according to data compiled by LSEG. It earned 35 cents per share, beating estimates of 28 cents. But the turnaround remains uneven. In the reported quarter, wholesale revenue jumped 5 per cent to US$6.5 billion, helped by stable sales in North America. But its direct-to-customer sales fell 4 per cent, dragged by muted demand in Europe and China. Shares of the company were down 3 per cent after the bell. The stock has lost about 17 per cent of its value in the last 12 months. "For what it's worth, the US has been the area Nike has been performing best in our visibility and, as such, a dent to American consumer confidence would blunt Nike's recovery efforts," said Drake MacFarlane, analyst at M Science. China has remained a sore spot, with sales sliding 7 per cent in the reported quarter. In its second-largest market outside North America, the company has struggled with weaker product assortments, while slower innovation has led to share losses against fast-rising local competitors, including Anta and Li Ning. The company's gross profit margin contracted for a sixth straight quarter, falling 130 basis points to 40.2 per cent, mainly due to tariffs. REUTERS Source: The Business Times. Article URL: https://www.businesstimes.com.sg/companies-markets/consumer-healthcare/nike-results-tops-estimates-turnaround-shows-uneven-progress