Nike is going to get its act together, says Jefferies' Randy Konik

? (Anchor) 00:00.350

all these stocks have struggled to struggle this year they're down double digits what is in store for these stocks going into next year let's bring in randy kona key is analyst at jeffrey 's buy rating on nike hundred ten dollars target hold on lululemon and good to see

Randy Konik (Equity Analyst and Managing Director) 00:13.470

you thanks for coming in thanks for having

? (Anchor) 00:15.670

me all right on wednesday didn't get a lot of attention today but tim cook the CEO of apple buying three million dollars worth of nike on the open market stock soared on that that's got to be a big pop or boost of optimism for nike yeah

Randy Konik (Equity Analyst and Managing Director) 00:32.470

look i think what tim sees is what we see is you have the number one in an attractive category which is sneakers nike lost some market share in the last couple years to companies like on and hoka and nike is going to get its act together they they had the wrong CEO they have the

Randy Konik (Equity Analyst and Managing Director) 00:47.710

right CEO now and that that new CEO is implementing

? (Anchor) 00:53.160

what about elliot that you think is so good

Randy Konik (Equity Analyst and Managing Director) 00:55.360

the former CEO that was bad he was an outsider elliott worked at the company for thirty five years he's an insider he knows how to fix the culture and he knows how to fix the fix the problem through an easy playbook that's fixing products and that's balancing distribution that's

Randy Konik (Equity Analyst and Managing Director) 01:08.950

working it's starting to work already in north america it's not working in china as of yet but that's where the opportunity is ahead

? (Anchor) 01:14.750

does it need to work in china to see this stock actually kick start here though

Randy Konik (Equity Analyst and Managing Director) 01:18.710

look last quarter wasn't great but that's because china was awful so clearly the market wants china to get better but you know the way we look at things is look at things on a twenty four month out basis and look at for look for green shoots that was north america getting better

Randy Konik (Equity Analyst and Managing Director) 01:33.590

that was inventory being right sized and that was north america also gross is getting better ex tariffs and EMEA also improving china was tough in the in the quarter down fifty percent in ebit but you know what went so bad it can be become good when you lap those comparisons in

Randy Konik (Equity Analyst and Managing Director) 01:49.430

four quarters

? (Anchor) 01:50.150

what the interesting part about you brought up the idea that that hoka is in play i mean that's that's a a different company a parent company there right you have other names out there like lululemon you have other names i i got my first pair of on running shoes my wife gave

? (Anchor) 02:05.150

them to me for christmas so i just got them they haven't seen blacktop yet they've only been walked around the house but when it comes to the competitive dynamic within athleisure overall what exactly positions a brand to then outperform in twenty twenty six if they have not

? (Anchor) 02:21.310

done so over the course of the past twelve to twenty four months

Randy Konik (Equity Analyst and Managing Director) 02:24.230

well first save the gift receipt for the on so you can return them and get some nikes but you know what makes a company like

? (Anchor) 02:30.910

and also what does it say your spouse gives you running shoes i don't know she's telling me to go outside more

Randy Konik (Equity Analyst and Managing Director) 02:35.430

so look i think the the beauty of nike what people forget is most of the business is footwear and in sneakers there's only ten companies in the world that matter in footwear so nike being number one losing some market share it's it's in a great position the problem with

Randy Konik (Equity Analyst and Managing Director) 02:49.950

something like lulu and we had a short call a big short call on this stock for over two years we recently upgraded the stock with the pending CEO departure the problem with apparel is that not only does lulu have to compete with nike and under armour and other athleisure names

Randy Konik (Equity Analyst and Managing Director) 03:05.470

they have to compete with levi 's and american and H and M and zara that's compete with thousands of businesses around the world that's why nike is in a special spot as it comes as it kind of gets its act together for twenty twenty six easy comparisons number one player

Randy Konik (Equity Analyst and Managing Director) 03:21.270

attractive category limited competition great moat that's what makes nike special for next year that's what tim cook saw i think with his stock purchase

? (Anchor) 03:29.550

are there are there other retailer playbooks that nike can draw on for this recovery and this return here and i ask that because it's been a big year for some of these beaten down names i look at gab i look at kohl's american eagle you just mentioned i mean there's been a number

? (Anchor) 03:42.990

of them where the stocks have soared because you've had new fresh leadership come in and basically turn things around

Randy Konik (Equity Analyst and Managing Director) 03:49.150

the best part of nike is it can use its own playbook this this problem at nike happened about a decade ago when adidas launched its ultra boost running platform nike lost its way for about a couple years and the CEO at that time mark parker who's now the chairman of the company

Randy Konik (Equity Analyst and Managing Director) 04:04.630

he actually implemented a similar strategy in two thousand seventeen that's right size the or fix the product double down on innovation and you know double down on marketing and balance distribution this is the same playbook the company used about a decade ago we think it works

Randy Konik (Equity Analyst and Managing Director) 04:19.910

ahead