NKE: Belief in the System

Research evidence excerpt

NKE: Belief in the System

A few other items from the quarter we would note:

A) The company highlighted improving momentum tied to key product and brand initiatives. There was strong engagement

around the World Cup, with increased consumer interest and product demand across football categories.

B) In North America, retail sales and revenue growth at Foot Locker (DKS, Buy, $300 PT) were positive for the first time in

four years, reflecting improved wholesale relationships and marketplace positioning.CONSUMER

C) Looking ahead, the product pipeline continues to build, with Spring 2027 expected to mark the first full season of

output from the new sport offense operating model, followed by a more consistent flow of new product introductions,

while locally designed, developed, and manufactured product in China is expected to begin contributing in Holiday 2027.RETAIL D) Nike also plans to host an Investor Day on November 16–17, where additional detail is expected on the company’s

longer-term strategy and financial outlook.

■ From a positioning standpoint, we would highlight that sentiment on the stock appears overly depressed at current levels.

Following a ~35% decline year-to-date, the shares have seen several recent downgrades, which has driven the current ratingEQUITY distribution to the lowest level we have seen in a decade. While we acknowledge that the turnaround is taking longer than

initially expected, we continue to believe Elliott Hill is the right leader for this business, given his deep understanding of the

brand, the marketplace, and the actions required to reset the model. In our view, the fundamental building blocks of the

turnaround are being put in place, even if the pacing has been more gradual, and we believe the opportunity to drive improved