NIKE Inc. NKE shares rose 2.8% yesterday following the announcement of a transformative 10-year extension to its longstanding partnership with the National Football League (“NFL”). The renewed agreement solidifies their commitment to advancing football through growth, innovation and progress.
Through the deal, NIKE is set to redefine its role in the game and further strengthen its alliance as the exclusive provider of uniforms, sideline gear and performance apparel for all 32 NFL teams for over a decade. Focused on delivering high-performance products tailored to the evolving needs of elite athletes, the partnership aims to enhance player safety, promote global growth and inspire the next generation of talent.
Nike emphasized that innovation and player health and safety will remain at the core of its mission. The company plans to harness the advanced capabilities of its Sport Research Lab to develop safer footwear and mitigate lower extremity injuries. These efforts aim to elevate the game for professional athletes while fostering the growth and development of football at every level, from grassroots to elite competitions.
The key initiatives of the NIKE-NFL partnership focus on expanding NFL's global presence by boosting participation, nurturing new talent and growing the football fan base worldwide. NIKE plans to bring football’s most captivating stories to life, forging stronger connections with fans through innovative approaches.
This renewal underscores the success of NIKE and NFL’s collaboration and their shared vision for the future of football. The NFL Commissioner acknowledged NIKE as a strategic partner, highlighting its role in shaping the sport's global trajectory since 2012. He stated that NIKE is more than just a provider of products and services for the NFL clubs, players, and fans, given its dedication to growing football on a global scale, advancing youth football and enhancing player safety.
This renewed partnership is expected to leave a lasting impact on the game at all levels, both in the United States and around the world. NIKE and the NFL remain steadfast in their mission to address the needs of today’s athletes while laying the foundation for a safer, more innovative sport for future generations.
NIKE’s Playbook Suggests Growth
NIKE’s playbook indicates it is on track with actions to reposition itself to be more competitive and drive sustainable, profitable long-term growth. The company is intensifying its focus on sports, speeding up the introduction and expansion of new products and innovations. NKE is enhancing its storytelling efforts with greater impact and boldness while elevating the overall marketplace to strengthen brand distinction and align with consumer preferences.
Additionally, NKE is accelerating its innovation pipeline, advancing several innovations. It is taking bold steps to reclaim its leading edge in innovation. Focus on its sports performance product category has been the key to its strategy. The company’s multiyear innovation cycle has been mainly focused on increasing its speed to the consumer.
For years, NIKE has used the Express Lane to facilitate short-lead-time replenishment and hyperlocal design, and it expects to continue leveraging this. In the past year, NIKE has developed a new approach across the entire product creation process called Speed Lane, a broader company-wide effort to move faster and be more responsive to the consumer. In the second half of fiscal 2025, the company has seen additional innovations launched from Speed Lane, including several new franchises in fitness and lifestyle.
NIKE’s gross margin is shaped by its strategic initiatives, market dynamics and operational efficiencies. By focusing on high-margin product categories, optimizing direct-to-consumer channels, managing costs effectively and leveraging innovation, Nike aims to sustain and enhance its gross margin.
Recent trends reveal that the company’s strategic pricing and supply chain optimization, including logistics, inventory management and distribution, have boosted gross margins. In first-quarter fiscal 2025, NKE’s gross margin expanded 120 basis points (bps) to 45.4%. The gross margin expansion can be attributed to the decline in NIKE Brand product costs, reduced warehousing and logistics expenses and gains from effective pricing actions.
However, the recent headwinds related to soft sales trends across its lifestyle products, lower NIKE Digital sales and issues in Greater China have been hurting this Zacks Rank #3 (Hold) company’s performance. As a result, shares of NKE have lost 27.4% year to date compared with the industry’s decline of 23.9%.
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Key Consumer Discretionary Picks
Some better-ranked companies are Wolverine World Wide WWW, Adidas ADDYY and Steven Madden SHOO.
Wolverine is engaged in the designing, manufacturing and distribution of a wide variety of casual and active apparel and footwear. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wolverine’s 2024 EPS of 89 cents indicates a substantial increase from 5 cents reported in the year-ago quarter. WWW has a trailing four-quarter earnings surprise of 17%, on average.
Adidas is a leading brand in the sporting goods market with strong positions in footwear, apparel and hardware. ADDYY carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for ADDYY’s 2024 sales and earnings indicates increases of 6.5% and a substantial 697.2%, respectively, from the year-ago period’s reported level. Adidas has a trailing four-quarter negative earnings surprise of 14.2%, on average.
Steven Madden designs and sells fashion-forward name-brand and private-label footwear for women, men, and children. SHOO carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Steven Madden’s 2024 sales and EPS indicates growth of 13.6% and 8.6%, respectively, from the year-ago reported figures. SHOO has a trailing four-quarter earnings surprise of 9.8%, on average.
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