Nike stock is breaking out Wednesday morning, clearing a 70.35 entry point from a flat base, a day after rival Under Armour cleared a bottoming base.
Source: Nike Stock Breaks Out On Heels Of Under Armour Jumping Into Buy Zone
Nike climbed to +70/share and Under Armour finally made it back into the 20s. While many are stunned that Nike has been able to weather the storm of management turnover due to a hostile work environment and Under Armour’s rise is happening amidst instability in the North American market, in January I made predictions for what would happen for the brands. Here are the major points I made for both UA and Nike:
On Nike:
The share price will hold and this slow time that every brand has had to gain ground will be over. The promotional environment which will continue to affect North America will not shape Nike as much because of CDO…Nike’s ability to launch more shoes than any other brand in more areas will no longer hurt them as they transition to controlling more of their market… Overall I see the brand growing from 32 Billion to 34 Billion as I said and that’s a good thing.
How Will Your Favorite Sneaker Brand Perform in 2018? | ($NKE) Nike
On Under Armour:
I think UA could have the type of break out year that adidas had last year… the problem is they don’t quite have a true grasp on the marketing they should be doing to reach that type of break out.
How Will Your Favorite Sneaker Brand Perform in 2018? | Under Armour ($UA) ($UAA)
My commentary on Under Armour is limited because when you read the article a lot of the information I presented is contingent on a concerted effort with marketing at the lead. Under Armour hasn’t quite figured out North America, but their marketing has been very good. The recent “Will Finds a Way” and “StephIQ” have been instrumental in developing narratives and building digital community. They haven’t been a passive company, but there are still issues. In a previous article on Under Armour I stated that by the fall the brand would be in the mid 20s for share price. They are right on schedule.
Nike isn’t bulletproof although they appear that way during this difficult time for management. What many people fail to realize is that the majority of the problems with Nike were inherently built into the company. The systemic issues are those of a natural progression. Nike is a company built by white, male runners. The company is in a midlife crisis and most people come out smarter and stronger in their 40s and 50s.
THIS IS NOT AN EXCUSE…
Someone had to snap them out of their complacency to show them that building a more diverse workforce would make the company stronger. The thing is the entire country overlooks the fact that while Portland holds the greatest amount of Nike Employees, Nike’s supply chain is basically a Black business. What does this have to do with Nike’s current issues? In Memphis the brand has diversity and they can actually call on the Memphis facilities for guidance on increasing diversity and improving the company. They haven’t necessarily done this, but they do have a model for repairing the issues at Nike. Now, there is one problem with Nike’s management issues that worries me although they have begun to work on this, Nike Memphis and the supply chain for the company is utilizing temporary employees creating considerable turnover for the company. The facilities also are in dire need of an update. Nike invested a considerable amount in the North Memphis facility, but a lot of the work is still done at the Tuggle/South Memphis facility. The brand has updated their Air Manufacturing facility in Missouri, but there are some issues with the supply chain at Tuggle which are covered because of the company being located in Memphis (which increases shipping speed). All of this is more in-depth than I intended, but it’s still important.
What is my point? Nike and Under Armour are performing a lot like I thought they would. adidas… unfortunately is also performing as I thought it would, but that’s another post.
