June 26, 2025 • 6 mins
New reports show Nike's stock has plummeted 68 percent from its November 2021 peak.
Experts say it's a textbook 'fallen angel' - a former market darling now trading at beaten-down prices.
Sam Dickie from Fisher Funds explains further.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk sed be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Sam Dickie is with us from Fisher Funds.
Speaker 3 (00:18):
Hello, Sam, good eating here.
Speaker 2 (00:20):
All right, let's talk about Nike, because, as he points out,
Nike has has had its stock plumb at sixty eight
percent from its peak, which about November twenty twenty one
is a textbook fallen angel. What's gone wrong here?
Speaker 3 (00:31):
Well? John Donaho, he was the CEO that came in
about five years ago in twenty twenty, and he pretty
quickly shifted Nike's focus. So, as you probably know, it
used to be all about having sported its course, so
organizing itself around megasports like basketball, running football, plus being
very very visible in retail stores and using its power
(00:52):
its might to elbow out all the wannabe brands off
the best shelves. So he did a few things. He
wanted to make the company more profitable, So he simplified
the company's divisions by memorom and kids rather than by sport.
And he turned his back on the shoe shops and
sports retailer to try and sell more products online, which
on the face of it makes sense because you have
(01:13):
a simpler divisional structure, you reduced a number of expensive
sports specific designers, and instead of paying away profit to
a retailer to sell your product, you keep that extra
profit for yourself and sell directly off your website. But
it backfired and Nike you lost it's sports specific product
innovation advantage. And what's worse, that shelf space it had
(01:35):
freed up by turning its back on retailers was greedily
gobbled up by smaller innovative brands like Hoker and on
Running Ah.
Speaker 2 (01:42):
And that's quite key, isn't it, Because because Hoker look
at what's happened to Hoker lately, right, and you've got
all of these because I mean, part of the story,
as you say, is what's going on within the business,
but part of it is also the pressure from the
competitors like Hoker, like Lulu Lemon as well, isn't it?
Speaker 3 (01:57):
That's right? And they were able to use their mic
previously to ensure they get all the best shelf space
in it in a shoe shop, for example, and when
they turn their back on those retail is that that
space was that greedy gobbled up. And ironically, here that
Hoker and on running used the same strategy that Nike
did back in the day to take on you know,
(02:17):
the big players back then probably eddied Ass, Converse, Puma
and used that really kind of sports specific product innovation.
So really focusing on running shoes, really focusing on basketball
shoes to beat at its own game.
Speaker 2 (02:34):
Now, look, I know retro is back, Sam, but do
you think that maybe overly reliant on their retro styles.
Speaker 3 (02:41):
Yeah, well, they have been super reliant on those mega brands,
and look that that's part of that. So that the
changing strategy and that reliance on those mega brands like
Jordan's et cetera, which I guess sort of retro has
punished the stock. So you know, inventory is every consumer
(03:01):
product company's worst nightmare, and Nike's inventory shot up from
five billion dollars to eight billion dollars because it couldn't
sell enough product by its new online strategy. Profit fell,
cash flow almost halved. So it not dire straits, but
the company got itself into a materially worse position than
it was and hence, as you say, it fell sort
of seventy percent in terms of stop price.
Speaker 1 (03:23):
Yeah.
Speaker 2 (03:23):
Now, the thing that you would refer to as Nike's
competitive moat. Is that still intact or is that gone forever?
Speaker 3 (03:29):
Well, that is the number one question. And remember, motor
is a sustainable competitive advantage, like a motor around your
business to ward off the ravages of competition. And Nike's
motor is of course it's incredibly powerful brand. But that
brand is supported by its scale. So it used to
support that brand with its scale by elbowing you know,
(03:49):
the wannabe Hokers and on runnings off the shelves. But
it also spends almost five billion a year on marketing
and sponsoring the best athletes in the world, and that
hasn't changed. So they recently wrapped up Caplan Clark the
WNBA Sensation for about twenty eight million bucks despite Puma
Eddi das under Arma or clamoring through a t I
think it was Lebron James that describes it best. He
(04:12):
could have gone with Rebok for one hundred and fifteen
million dollars, but we were Nike for ninety million dollars
because he went and saw them and was walking the
hallways and saw life sized cutouts of Michael Jordan and
Tiger Woods and realized he had to side with Nike.
And the other thing is that the CEO, John Donna,
who's now gone as well, so he's been replaced by
Elliot Hill, who started at Nike in nineteen ninety eight,
(04:34):
is in the intern and he's changed course. He's steered
the company back towards its course. So I think the
moat is still there, it just needs to be fixed
up a bit.
Speaker 2 (04:43):
Interesting, Okay, So what does this mean for investors? What
do they need to consider?
Speaker 3 (04:47):
It's a reminder of a few things. So of all
the types of moats, so think about cost advantages, customer
switching costs, or even patents. Brand can be the most
fickle one, So a brand note mote needs to be
well looked after, which it wasn't under John Donahoe. And
it's also a reminder I think for companies that hiring
from the outside can be a risk. So John had
(05:09):
been on the board of Nike, but he'd never kind
of worked for Nike as an employee. He'd never lived
and breathed on a daily basis what makes the place tech?
And a new CEO was hired as an intern. That's
almost thirty years ago. So what is interesting, Heather, is
the proof is going to be in the pudding because
the company's reporting it's fully a result tomorrow, and one
(05:30):
thing for sure is for sure. Sentiment is very bearish, which,
on the one hand, is very helpful because even a
halfway decent result should see the stock price move higher.
But if Nike misses earning the expectations significantly tomorrow and
can't even get over the very low bar set by
a seventy percent full in the stop price, perhaps that
amazing brand mode is even more damage than the market thinks.
Speaker 2 (05:52):
Interesting. Okay, Hey, thank you very much. I really appreciated it.
As per usual Sam that Sam Dicky Official funds.
Speaker 1 (06:00):
For more from News Talks'd be listen live on air
or online and keep our shows with you wherever you
go with our podcast on iHeart Ready Out
You're listening to a podcast from News Talk sed be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Sam Dickie is with us from Fisher Funds.
Speaker 3 (00:18):
Hello, Sam, good eating here.
Speaker 2 (00:20):
All right, let's talk about Nike, because, as he points out,
Nike has has had its stock plumb at sixty eight
percent from its peak, which about November twenty twenty one
is a textbook fallen angel. What's gone wrong here?
Speaker 3 (00:31):
Well? John Donaho, he was the CEO that came in
about five years ago in twenty twenty, and he pretty
quickly shifted Nike's focus. So, as you probably know, it
used to be all about having sported its course, so
organizing itself around megasports like basketball, running football, plus being
very very visible in retail stores and using its power
(00:52):
its might to elbow out all the wannabe brands off
the best shelves. So he did a few things. He
wanted to make the company more profitable, So he simplified
the company's divisions by memorom and kids rather than by sport.
And he turned his back on the shoe shops and
sports retailer to try and sell more products online, which
on the face of it makes sense because you have
(01:13):
a simpler divisional structure, you reduced a number of expensive
sports specific designers, and instead of paying away profit to
a retailer to sell your product, you keep that extra
profit for yourself and sell directly off your website. But
it backfired and Nike you lost it's sports specific product
innovation advantage. And what's worse, that shelf space it had
(01:35):
freed up by turning its back on retailers was greedily
gobbled up by smaller innovative brands like Hoker and on
Running Ah.
Speaker 2 (01:42):
And that's quite key, isn't it, Because because Hoker look
at what's happened to Hoker lately, right, and you've got
all of these because I mean, part of the story,
as you say, is what's going on within the business,
but part of it is also the pressure from the
competitors like Hoker, like Lulu Lemon as well, isn't it?
Speaker 3 (01:57):
That's right? And they were able to use their mic
previously to ensure they get all the best shelf space
in it in a shoe shop, for example, and when
they turn their back on those retail is that that
space was that greedy gobbled up. And ironically, here that
Hoker and on running used the same strategy that Nike
did back in the day to take on you know,
(02:17):
the big players back then probably eddied Ass, Converse, Puma
and used that really kind of sports specific product innovation.
So really focusing on running shoes, really focusing on basketball
shoes to beat at its own game.
Speaker 2 (02:34):
Now, look, I know retro is back, Sam, but do
you think that maybe overly reliant on their retro styles.
Speaker 3 (02:41):
Yeah, well, they have been super reliant on those mega brands,
and look that that's part of that. So that the
changing strategy and that reliance on those mega brands like
Jordan's et cetera, which I guess sort of retro has
punished the stock. So you know, inventory is every consumer
(03:01):
product company's worst nightmare, and Nike's inventory shot up from
five billion dollars to eight billion dollars because it couldn't
sell enough product by its new online strategy. Profit fell,
cash flow almost halved. So it not dire straits, but
the company got itself into a materially worse position than
it was and hence, as you say, it fell sort
of seventy percent in terms of stop price.
Speaker 1 (03:23):
Yeah.
Speaker 2 (03:23):
Now, the thing that you would refer to as Nike's
competitive moat. Is that still intact or is that gone forever?
Speaker 3 (03:29):
Well, that is the number one question. And remember, motor
is a sustainable competitive advantage, like a motor around your
business to ward off the ravages of competition. And Nike's
motor is of course it's incredibly powerful brand. But that
brand is supported by its scale. So it used to
support that brand with its scale by elbowing you know,
(03:49):
the wannabe Hokers and on runnings off the shelves. But
it also spends almost five billion a year on marketing
and sponsoring the best athletes in the world, and that
hasn't changed. So they recently wrapped up Caplan Clark the
WNBA Sensation for about twenty eight million bucks despite Puma
Eddi das under Arma or clamoring through a t I
think it was Lebron James that describes it best. He
(04:12):
could have gone with Rebok for one hundred and fifteen
million dollars, but we were Nike for ninety million dollars
because he went and saw them and was walking the
hallways and saw life sized cutouts of Michael Jordan and
Tiger Woods and realized he had to side with Nike.
And the other thing is that the CEO, John Donna,
who's now gone as well, so he's been replaced by
Elliot Hill, who started at Nike in nineteen ninety eight,
(04:34):
is in the intern and he's changed course. He's steered
the company back towards its course. So I think the
moat is still there, it just needs to be fixed
up a bit.
Speaker 2 (04:43):
Interesting, Okay, So what does this mean for investors? What
do they need to consider?
Speaker 3 (04:47):
It's a reminder of a few things. So of all
the types of moats, so think about cost advantages, customer
switching costs, or even patents. Brand can be the most
fickle one, So a brand note mote needs to be
well looked after, which it wasn't under John Donahoe. And
it's also a reminder I think for companies that hiring
from the outside can be a risk. So John had
(05:09):
been on the board of Nike, but he'd never kind
of worked for Nike as an employee. He'd never lived
and breathed on a daily basis what makes the place tech?
And a new CEO was hired as an intern. That's
almost thirty years ago. So what is interesting, Heather, is
the proof is going to be in the pudding because
the company's reporting it's fully a result tomorrow, and one
(05:30):
thing for sure is for sure. Sentiment is very bearish, which,
on the one hand, is very helpful because even a
halfway decent result should see the stock price move higher.
But if Nike misses earning the expectations significantly tomorrow and
can't even get over the very low bar set by
a seventy percent full in the stop price, perhaps that
amazing brand mode is even more damage than the market thinks.
Speaker 2 (05:52):
Interesting. Okay, Hey, thank you very much. I really appreciated it.
As per usual Sam that Sam Dicky Official funds.
Speaker 1 (06:00):
For more from News Talks'd be listen live on air
or online and keep our shows with you wherever you
go with our podcast on iHeart Ready Out
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