Shorting NKE: part 16
Homework- part 1
Nike fumbles its biggest launch of the year
Every day I have to prepare for the next.
Markets can shock. Explode. Grind to a screeching halt. Under pressure, and trading on low volumes and skewed data, a market can exhale and cause a seizure. They can collapse in silence.
The pressure rarely builds overnight. It comes together like 2008. Oil was 145 dollars a barrel. The USA was being challenged to pick a new POTUS. The fallout of the war in Afghanistan. The spikes in poverty. The housing market’s inability to hold value. The inability for anyone to tell the truth.
What is happening with NKE is also happening with Starbucks and Lululemon.
Tariffs? Coffee prices? Bad management from a 20th century model that relies on the magic of branding? What if it is all of the above?
The war between retailers and brands has expanded. They are now in competition with one another, and brands are about to experience, as mentioned before, the Mercadona effect.
The Spanish retailer challenges brand innovation by creating generic/own brand clones at lower prices. Once their rate of sale is faster than the brand’s, they threaten to de-list.
So, launches have to be perfect. Everything has to be perfect. And that, in any world, never mind a volatile one, is not possible.
To be continued…