NIKE, Inc. (NYSE:NKE) is one of the 22 stocks Jim Cramer recently talked about. Discussing a “story about Vietnam” and tariffs, Cramer commented:
“Today, we found out that the Vietnam tariff would only be 20%, not great, but certainly less than what Trump proposed on Liberation Day. We all knew that Nike moved a lot of stuff to Vietnam, and that was the easy story, hence why it shot up 4% today on top of a lot of other points since it reported.”
A team of trainers and athletes displaying a wide range of athletic and casual footwear.
NIKE, Inc. (NYSE:NKE) designs, produces, markets, and sells athletic footwear, apparel, equipment, and related services. The company’s products are developed for a range of specific sports. On May 29, Cramer extensively commented on the company as he said:
“When Nike last reported in March, the results were solid enough, but management also hit us with a pretty dour outlook, talking about a revenue decline in the low to mid-teens for the current quarter, wow, with a 400, 500 basis point decline in gross margins. Oh man, that’s terrible…
I’m conflicted on Nike. On the positive side, the new CEO has a clear strategic plan to turn things around by focusing on running, basketball, football, training, and sportswear…
I simply think that the stock is more de-risked than it’s been in quite some time after two consecutive kitchen sink quarters where management did everything they could to reset expectations… All that said, while there are real positives here, including indications that China’s actually stronger than you would expect, I find it hard to get too bullish on Nike because this brand just ain’t what it used to be. In particular, I worry about the competition in athletic footwear, which has long been Nike’s bread and butter… It also didn’t help that Nike got pretty aggressive with its pricing…
So here’s where I come down on Nike: I believe it can mount a comeback, but I also think that a meaningful complete turnaround could take a longer time than expected. If you’re tempted to play a turnaround here, and I don’t blame you, I would start with a small position. That way, if something else goes wrong, you can buy more into weakness, pyramid style, or you can just cut your losses. And if Nike reports a good quarter with healthy guidance next month, well, you’ll get a chance to capture some upside.
The bottom line: I am optimistic that the worst is indeed behind Nike, or at least will be soon. And I think there’s a good chance for a comeback, especially with a seasoned hands-on Nike veteran like Elliott Hill at the helm. That said, I don’t have a ton of conviction in the turn happening quickly, so I’d advise you to start slowly with a small position and only buy more if Nike gives you a good reason to pull the trigger.”
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