Profit Players July 10

Author

Nate Rodgers
July 10, 2024

What’s wrong with Nike?

Nike is facing significant financial and consumer confidence challenges, compounded by its worst single day on the stock market. After a weak quarterly earnings report and a downgraded future outlook, Nike shares fell 20%, losing about $28 billion in value. Despite slight gains and losses in subsequent trading days, shares remain at their lowest since early 2020. The company had been undergoing a $2 billion cost-cutting campaign and dealing with issues, including a problematic MLB uniform deal.

The earnings report revealed further troubles, including a projected 4-6% sales decline for Fiscal Year 2025 and a 10% drop in the current quarter. Nike has faced competition from brands like Hoka, On, and New Balance. That along with poor online sales numbers and a reduced sales outlook in China is cause for concern. CEO John Donahoe acknowledged significant headwinds impacting the company, and analysts predict a prolonged recovery period. As part of a business reset, Nike plans to introduce a new line of more affordable footwear priced below $100 to address consumer concerns about high prices. CFO Matthew Friend highlighted efforts to tackle opportunities across different price points.

Recent setbacks include the MLB uniform rollout debacle, ongoing cost-cutting measures involving layoffs, and a perceived decline in influence within the running community. The company adjusted its fiscal 2025 outlook to a projected 4-6% sales decline, with a 10% drop expected in the current quarter. Nike's struggles contrast sharply with the resurgence of competitors like Foot Locker, Adidas, and Dick’s Sporting Goods. CFO Matthew Friend expressed confidence in repositioning Nike for sustainable, profitable growth despite the challenges highlighted by the fourth-quarter results.

What is college football going to look like?

College football is facing a transformative season marked by significant conference realignments driven by financial incentives. Traditional powerhouses are abandoning long-standing geographical and historical ties, leading to a reshuffled landscape. USC, UCLA, Washington, and Oregon are joining the Big Ten, expanding it to 18 teams. Stanford and California are moving to the ACC, while Texas and Oklahoma are joining the SEC. Colorado, Utah, Arizona, and Arizona State are heading to the Big 12, which might even sell naming rights to corporate sponsors, highlighting the extent to which money influences these changes.

The departure of legendary coaches Nick Saban from Alabama and Jim Harbaugh from Michigan marks the end of an era. Saban retired, seeking a more relaxed lifestyle, while Harbaugh left to coach the Los Angeles Chargers. Their replacements, Kalen DeBoer at Alabama and Sherrone Moore at Michigan, face immense pressure to maintain their programs' high standards. This coaching turnover adds another layer of uncertainty to an already tumultuous season.

Additionally, the college football playoff system is expanding from four to twelve teams, aiming to generate more revenue and extend the postseason excitement. This expansion raises concerns about the impact on the regular season, as a top-ranked team suffering a surprising loss may still have a path to the championship, potentially diminishing the importance of regular-season games. Fans worry that the sport's unique regional rivalries and traditions might be diluted by these changes, but the passion for college football remains strong as it navigates this period of change.

Paul Skenes is really good

Paul Skenes, a 22-year-old pitcher for the Pittsburgh Pirates, is making waves in Major League Baseball, earning a spot on the National League All-Star team just two months after his call-up. Skenes, the first player ever to be drafted No. 1 and named an All-Star in consecutive years, has defied the typical lengthy development process in the minors, achieving a 5-0 record with 78 strikeouts in 59⅓ innings—one of the best starts for a pitcher since 1901. His performance is changing perceptions of how quickly young talent can impact the sport, and there is even speculation that he might start the All-Star Game, despite playing for a struggling team in a small market.

Beyond his on-field success, he has a prominent following on social media. This combination of athletic prowess and social media fame positions Skenes to potentially become one of baseball's most prominent figures, a sentiment echoed by his former LSU teammate Tre’ Morgan, who believes Skenes's talent is now widely recognized. Skenes hopes to become MLB’s next big star and help to continue the resurgence of America’s past time.

Quick Reads

  • Jontay Porter will face federal criminal charges after being connected to four men who made bets using knowledge from a player.

  • Lewis Hamilton won the British Grand Prix.

  • Caitlin Clark became the first rookie in WNBA history to record a triple double

  • Tiger Woods and Justin Timberlake are opening a new sports bar less than 1 mile from the Old Course in Scotland.

  • Davis Thompson takes home the victory at the John Deere Classic

Jobs in Sports

Games of the Week

  • Uruguay vs Colombia - Wednesday @ 8 PM EST

  • Taylor Fritz vs Lorenzo Musetti - Wednesday @ 9:30 AM EST

  • Carlos Alcaraz vs Daniil Medvedev - Friday @ TBD

  • Philadelphia Phillies vs Los Angeles Dodgers - Wednesday @ 7 PM EST

  • Scottish Open - (Thursday-Sunday)

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