TIVP015: NIKE (NKE): JUST BUY IT?

DANIEL MAHNCKE AND SHAWN O’MALLEY

13 April 2025

Daniel Mahncke and Shawn O’Malley break down Nike (ticker: NKE), the global leader in athletic footwear and apparel. With a legacy built on innovation, iconic athlete endorsements, and a brand that resonates across generations, Nike has long been a dominant force in the sportswear industry. But after years of consistent success, the company is now navigating through one of its toughest stretches in decades, facing slowing sales, margin pressure, and growing competition from younger, more trendy brands.

In this episode, you’ll learn why Nike’s once-flawless growth story has recently hit turbulence, how its shift toward direct-to-consumer impacted its wholesale relationships, what the brand is doing to win back market share and reignite innovation, why CEO Elliott Hill is refocusing the company on core sports categories, and whether this could be the reset Nike needs to stage a long-term comeback — plus a whole lot more.

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IN THIS EPISODE, YOU’LL LEARN:

  • How Nike went from a small retail store to the biggest brand in sportswear.
  • How Nike’s business is structured.
  • Why Nike’s management decisions caused today’s challenges.
  • How the new competitive landscape looks.
  • Whether Nike still has a moat.
  • Why Nike lost the edge on innovation.
  • What Nike’s new CEO is doing to turn the ship around.
  • How do Nike’s most recent results look.
  • How to think about Nike’s intrinsic value.
  • Whether Shawn & Daniel add NKE to The Intrinsic Value Portfolio.
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: Nike’s mode is based on its marketing success through collaborations with the biggest sports athletes in the world. For example, Michael Jordan. But the re-resulting brand awareness wasn’t its only moat. As mentioned, Nike’s wholesaler dominance was crucial as well, but perhaps that’s not an actual moat.

[00:00:20] Daniel Mahncke: It’s more of a legacy position that kept working because wholesalers had no incentive to cut the relationship. Unfortunately, for Nike, they underestimated their own legacy advantage, and they cut it themselves. Perhaps without having the most innovative products. The actual brand value of Nike is less important than one would’ve thought.

[00:00:49] Daniel Mahncke: Hey guys. Before we get into today’s episode, I have a quick disclaimer. Our discussion was recorded shortly before the US announced its latest round of tariffs. One country particularly affected is Vietnam, when Nike now produces 50% of its footwear and 28% of its apparel following a major shift away from Chinese manufacturing in recent years.

[00:01:13] Daniel Mahncke: As I record this, there are already talks about potentially reversing the tariffs, so by the time you’re listening to this, they may already be a thing of the past, but it’s worth noting that if these tariffs persist, they could put additional pressure on Nike’s margins and effect sales if higher prices are passed on to consumers.

[00:01:33] Daniel Mahncke: Either way, today’s episode remains highly relevant, and as always, you can download our valuation model and adjust the assumptions based on your own view. With that said, let’s jump straight into today’s episode.

[00:01:48] Shawn O’Malley: Hey guys. Today my co-host Daniel Mahncke, is back with another company pitch for our intrinsic value portfolio, which is a portfolio of stocks we’re building over time on this show by breaking down a wide range of companies.

[00:02:02] Shawn O’Malley: In the last few weeks, we’ve discussed names like Nintendo, Reddit, and Moncler. And today, Daniel, you will be pitching a company that I can confidently say everyone who has ever owned a pair of sneakers will know about. And we’re talking of course about the biggest footwear brand in the world, Nike. As a basketball player, for most of my life, I have owned my fair share of Nike shoes, and in part I’m sure that’s because of Nike’s relationship with Michael Jordan and his Air Jordan sneakers that made Nike synonymous with not only basketball, footwear, but the greatness of Jordan himself.

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