3. NIKE, Inc. (NYSE:NKE)
Year to Date Return: -24%
Number of Hedge Fund Holders: 66
NIKE, Inc. (NYSE:NKE) is one of the most iconic brands in the world as it designs, develops and markets some of the most sought-after athletic footwear apparel equipment and accessories. Nevertheless, it has turned out to be one of the worst-performing blue chip stocks in 2024, going down by about 24% year to date.
The underperformance comes against the backdrop of disappointing results that underscore the fact that the company desperately needs a turnaround. In its most recent fiscal first quarter, 2025, revenue was down by 10% to $11.9 billion as earnings fell 26% to $0.70 a share. Revenue in the company’s direct-to-consumer arm was down 13%
The weak financial results come from NIKE, Inc. (NYSE:NKE)’s core business feeling the full brunt of high interest rates and high inflation that have significantly affected consumer purchasing power.
In an effort to lessen its reliance on outside merchants, Nike has increased its direct-to-consumer Nike Direct channel, which includes both its online store and physical locations, over the last ten years. At first, that tactic protected its brand from markdowns by third parties, locked in its customers, and expanded its moat against rivals.
Even as it attempts to revitalize its business by introducing new products, shifting to a product mix that includes a higher percentage of luxury shoes, and strengthening its ties with customers through sponsored events and activities, NIKE, Inc. (NYSE:NKE) anticipates that the slowdown will persist. In fiscal 2025, analysts predict a 7% and 28% drop in revenue and earnings, respectively.
Nike’s dividend yield has increased while its stock price has stagnated. Nike announced a 9% dividend increase in November 2023, the 22nd year in a row that the company has done so. Nike’s current yield is a commendable 1.8%. The value of Nike has also decreased.
According to Insider Monkey’s database, 66 hedge fund portfolios held NIKE, Inc. (NYSE:NKE) at the end of Q2 2024, down from 71 in the previous quarter.
Here is what Coho Relative Value Equity Strategy said about NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“While we believe each of those companies is performing in line with or better than our expectations and that the moves lower are unjustified, both CVS and NIKE, Inc. (NYSE:NKE) reported disappointing performance in recent results. For Nike, the company reported mixed fourth quarter Fiscal 2024 results and weak Fiscal 2025 guidance, reflecting top line pressure from lifestyle product slowing, lower digital sales and increased macro headwinds in international markets. To manage through the decline in sports footwear and apparel demand, the senior leadership team is focused on cutting costs and reinvesting in marketing and innovation to drive sales. The company is starting to see green shoots for performance product innovation and has historically emerged stronger from these downturns due to benefits from a leading market position and scale.”
