Nike has stumbled, will it outrun the competition?

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Stock Takes is off to a good start, with stocks I suggested readers could consider buying last year turning in a combined average return of more than 25% from their respective dates of publication through December 31, 2024 (excluding December posts which had a publish date of less than a month through year end). In comparison, the S&P 500 index turned in more than 11% in the period June 3, when I published my first Stock Take, through December 31, and the NASDAQ Composite was up 15% during this period.

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Stock Ticker Publish date Return through 12/31/24

Nvidia NASDAQ: NVDA 06/03/24 16.5%

Chipotle NYSE: CMG 06/20/24. (– 6%)

Vertiv NYSE: VRT 06/28/24 31%

Rivian NASDAQ: RIVN 07/05/24 (–10%)

Reddit NYSE: RDDT 07/26/24 162%

Digital Realty NYSE: DLR 08/06/24 19%

Apple NASDAQ: AAPL 08/15/24 11.5%

Advanced Micro

Devices NASDAQ: AMD. 08/26/24. (–19.5)

Palantir NASDAQ: PLTR 09/15/24 112.5%

Walmart NYSE: WMT 10/06/24 11.5%

Vistra NYSE: VST 10/26/24 11%

Dell Tech. NYSE: DELL 11/06/24. (–16.5%)

Alphabet NASDAQ: GOOGL 11/26/24 12%

Total average return 25.7%

After finding favor with investors and going from strength to strength since its December 1980 debut in the public stock market, Nike Inc. (NYSE:NKE) has stumbled in recent months. The company has provided big returns to its investors in the past, with its stock closing at about $73 on January 3, compared to its split-adjusted price of $0.18 when it started trading on the public stock market. The stock has seen seven two-for-one stock splits along the way, and also pays dividends.

The company’s co-founder Bill Bowerman, a track and field coach, started working on improving shoe design in the 1950s and, together with Philip Knight, launched Blue Ribbon Sports, the predecessor to Nike, in 1964. In Bowerman’s view, “A shoe must be three things, it must be light, comfortable and it’s got to go the distance.” Nike shoes met these criteria and caught on with consumers, while leaning on multiple celebrity endorsements along the way. However, the company lost its focus at some point and is now trying to get back on track. According to Elliott Hill, Nike’s president and CEO, on the company’s second quarter earnings call with analysts, “From everything I heard and observed, there are clear themes about the recent state of our business and where we need to go. I'll start with a high-level observation. We lost our obsession with sport. Moving forward, we will lead with sport and put the athlete at the center of every decision.”

Hill, a more than 30-year Nike veteran who started out as an intern at the Beaverton, Ore. company, took over from John Donahoe as Nike’s CEO last September. It seems Donahoe, a management consultant without deep knowledge of the sneaker market or on-the-ground retail industry experience, made some missteps, de-emphasizing retail partnerships with outlets such as Macy’s and Foot Locker while looking to engage in more direct consumer sales. Hill comes back to Nike after going into retirement in 2020, when he was Nike’s president of consumer and marketplace. After serving in various sales and marketing-related roles during his Nike career, will Hill now be able to draw on his marketing expertise and Nike experience to get the company back on track for investors?