Jim Cramer Says We’re Entering a Bear Market and Breaks Down These 10 Stocks

7. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 73

A caller asked Jim Cramer about NIKE, Inc. (NYSE:NKE), and Cramer shared a candid view on the brand’s recent performance, pointing to emerging competition, and how he actually prefers one of the brand’s competitors:

“You know it’s funny, I was talking to my trainer today, Jim, and we were both saying that Nike really has lost its edge, and that ON is the way to go, ONON. And I think the stocks correctly reflecting that analysis. I know they’re trying to turn in that striking but you know the other companies aren’t standing still while they try to turn, and that’s the big difference from all the other times I’ve seen Nike stumble.”

NIKE is one of the world’s leading athletic apparel and footwear brands, known for its iconic swoosh logo and deep sports marketing footprint. While historically dominant, the company is now facing increased competition from brands like On and Hoka in the performance segment, as well as macroeconomic headwinds.

RiverPark Large Growth Fund shared the following commentary on NIKE, Inc. (NYSE:NKE) in its Q4 2024 investor letter:

“NKE shares were a top detractor in the quarter following better than expected fiscal second quarter results reported in December but worse than feared third quarter guidance. The company delivered $13.4 billion of revenue (roughly $1 billion better than expectations) and $1.9 billion of EBIT (roughly $500 million ahead of street consensus) and generated better than expected earnings of $1.03 (investors were looking for $0.78). Despite better operating metrics last quarter, the company dramatically lowered expectations for the fiscal third quarter including expectations for double-digit percentage declines in revenue. NKE’s new CEO, Elliot Hill, described several key issues negatively impacting the company’s growth trajectory including 1) a multi-year move away from a focus on sports, 2) a shift away from innovative demand creating marketing, 3) too much centralization, which has led to lack of execution capabilities in local markets, and 4) too much focus on Nike Digital, which negatively impacted the brands standing in the marketplace. Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $50 billion in revenue, $6.7 billion in FY2024 annual free cash flow, and $10 billion of 7 excess cash. We believe that over the long term, the global secular growth trend towards active wear will continue to aid Nike’s top-line growth driving gross and operating margin improvements and long-term mid-teens or higher annual EPS growth. In the short term, we believe that the company will work through the above headwinds and that revenue and earnings growth will reaccelerate in the next 12 months.”