NKE: What’s the Future of the Futures?

We disagree with the noise about Nike’s futures growth rolling over. The underlying trend-line numbers should accelerate. Our call on the name and the space remain intact.


It used to be about two out of every three quarters where I’d have to come out and add context to an errant report about futures slowing (or accelerating) a week before Nike’s quarter.


Well, it’s been a while, but I’m back.  OTR (or some ‘channel checker’) is out saying that Nike’s order rate is slowing ahead of its 3Q report on March 17.   


I disagree. Here are a few considerations.

  1. Let’s face some facts, being a ‘channel checker’ might work on tiny brands like K-Swiss, or in monitoring the popularity of certain styles or consumer preferences.  But, is it viable to check with stores (where most managers don’t know the difference between year-over-year and sequential growth) and use such a small sample as a proxy for a $21bn global company? That’s like going into a Duane Reade and making a call on P&G based on shelf space for Crest.
  2. Last quarter Nike reported a 16% growth rate in North American futures.  To put that into context, that’s about the dollar-equivalent size of Under Armour. NO ONE I have spoken to believes that this is sustainable – not even me, and my EPS estimates are well ahead of consensus for the next 2-years.
  3. Keep in mind that the 2-year comp for the past two quarters in North America is 5-6%. Technically speaking, Nike can report a NA  futures number as low as 3% and sustain the 2-year run rate. We’re still looking for something closer to 10%. In other words, we’re modeling an acceleration in the 2-year comp for North America.

Backing our confidence is an extremely powerful product cycle in the athletic space, which is not surprisingly led by Nike.


For the past several months, we’ve been noting that Nike was about to set out on a campaign to re-define it’s “Free” concept – which is a technology originally launched in 2004 to mimic the sensation of running barefoot on grass. Nike might seem dismissive of the toning category, but mark my words – they’re miffed, BIG TIME. Our call has been that they’d start with the Free platform, and re-define the toning category. Now we’re starting to see it play out.  Most notable is that the first big splash is in none other than China. This marks the first time we recall a new platform being  launched anywhere except the US.




Make sure you scroll through all the pages for all the images.  Looks like there’s Free Run 2 and Free 3.0


The 3.0’s are now available in one colorway on Nike.com and at Foot Locker.  99% of what was shown in China is not yet available for purchase here or anywhere.  However, they’ll trickle out within a few weeks.  A quick check on Nike.com reveals a Free platform that spans running, training, walking ,and even a bit of fashion.  Some of this already existed.  Importantly, we have yet to see the big marketing push that goes with the launch but our sense is that it’s coming real soon…


We’d also bet that this next wave of product innovation makes its way into the first three minutes of Nike’s March 17th 3Q EPS call.


Brian McGough

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more