My thesis on Nike

2024 was arguably the worst year in Nike's history-- and the stock price has reflected appropriately.

But I believe, given their brand moat and that they remain Gen Z's favorite brand, I believe a turnaround is highly probably (but we will need to be patient) (https://www.sneakerfreaker.com/news/gen-z-nike-new-balance-adidas-favourite-brand-explained/)

Particularly, new CEO Elliott Hill's strategic vision, if executed, will result in a turnaround:

• Refocus on Sport & Athletes -- "With sports as our North Star, we will re-energize our culture and identity,” he told employees. Hill has spent his first months on the job meeting with top athletes (from Michael Jordan to Cristiano Ronaldo and Serena Williams) and major sports league partners (NBA, NFL, WNBA, NCAA, etc.) to ensure Nike is tapped into the heartbeat of sport. The ethos is clear: by obsessing authenticity in each sport, Nike can differentiate its brand and recapture the “magic” that made it the leader in athletic gear

• Accelerating Product Innovation & Newness -- A critical part of the turnaround is reigniting Nike’s product pipeline to create the must-have sneakers and apparel of the future. Hill observed that Nike lacked “newness” recently, relying too heavily on a few classic franchises. Going forward, Nike is shifting resources away from overused legacy styles and toward fresh innovation in high-volume sport categories. “We will get back to leveraging deep athlete insights to accelerate innovation, design and product creation,” Hill vowed.

• Rebuilding Wholesale Partnerships & Marketplace Balance -- Previous CEO John Donahoe, made a big point after the pandemic to focus on DTC sales. This was a folly. ebalancing Nike’s channel strategy is another top priority. Hill acknowledged that Nike’s prior DTC-first approach “negatively impacted marketplace health” by pitting Nike’s own channels against long-time retail partners. The goal is a healthier channel mix – Nike’s own DTC business will remain important (both for margin and brand control), but not at the expense of broad consumer reach. By clearing out excess inventory and reducing endless markdowns, Nike can return to a full-price, brand-enhancing stance in the marketplace

• Streamlining Operations and Culture -- Alongside these external initiatives, Hill is making internal moves to enable faster execution. Nike has gone through layoffs in the past year , and Hill will be looking to instill a renewed sense of accountability and urgency. He has said that Nike must “understand the areas where we need to improve, put leaders and teams in place against those opportunities, and hold each other accountable for delivering” . This hands-on, performance-oriented leadership style is aimed at breaking down silos and speeding up decision-making (“simplify and go,” as Hill puts it ). His experience as Nike’s former President of Consumer and Marketplace (overseeing P&Ls across geographies) means he knows how to operate at both global and local levels. Already, Nike’s org structure is being tweaked – as noted, Hill introduced a Men’s/Women’s/Kids segmentation to drive more tailored product strategies

• Speaking of which, Women’s and Youth Segments Expansion --  One of Nike’s explicit growth priorities is to win with women consumers and the next generation of athletes. Historically, Nike’s business skewed toward men’s footwear, but the women’s category (including women’s athletic apparel and footwear) is a multi-billion dollar opportunity that Nike has been under-penetrated in. Elliott Hill has already signaled an emphasis here – stating “it’s always a good time to be a women’s basketball fan, but what a time like now,” and highlighting the planned relaunch of the Nike Women’s Race Series (a global women-focused running event series) in 2025