'Nike is ... never satisfied. It’s like an athlete:' UBS analyst Jay Sole

BRAZIL - 2019/07/04: In this photo illustration a Nike logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Predicting the future is tough — especially when it comes to retail. However, it looks like Nike (NKE) and the overall retail industry are heading in the same direction, with a focus on consumer engagement and digital. With the largest sportswear company in the world set to release earnings after the bell today, Yahoo Finance caught up with UBS analyst Jay Sole at the firm’s “Future of Retail” conference to discuss the swoosh brand’s standing within the industry.

“The future of Nike and the future of retail are tied together,” said Sole. “The thing about Nike that is maybe one of the most under talked about aspects is the culture of the company. It’s always driving forward, never satisfied. It’s like an athlete that always wants to win the next game and beat [a] personal record.”

Nike shoes are seen displayed at a sporting goods store in New York City, New York, U.S., May 14, 2019. REUTERS/Mike Segar

Sole expects the Oregon-based company to build upon its strong customer engagement through personalization and customization.

“We think Nike will be able to have that conversation with its consumers on a one-on-one personalized basis, and it will get better at that every year ... Nike has a vision of being a much more digital company. It will probably look to drive more business through their own channels going forward with fewer but better retail partners.”

One of those retail partners is Footlocker (FL). According to Footlocker’s Kambiz Hemati, VP of global store design, the company’s Washington Heights (NYC), power store is the first in which the Nike app works in-store.

As far as Nike’s financial future goes — Sole and UBS believe that the company will continue to do well globally in terms of generating growth. However, he says currency fluctuations might affect the company’s revenue.

“The dollar has gotten a lot stronger over the last three months. And with Nike being a multinational company, with half the sales outside the U.S., when the dollar strengthens it can be a headwind on their financials,” he said. “They’re selling shoes in other countries where all of a sudden the value of the currency is less — the money they’re getting for those shoes is now worth less. So when they bring it home and convert it back to dollars, it’s less than they expected.”

The UBS analyst believes that the recent change in foreign currency rates alone will have a negative 1% impact on Nike’s sales growth rates for the full year.

“For a company like Nike, that’s meaningful. That can be the kind of thing that could offset some of the good that is happening from a pure product, engagement perspective, and the things that the company does very well.

UBS expects a small beat out of Nike as far as Q1 earnings are concerned. The firm points to the fact that the company has beaten consensus EPS estimates in 18 of the past 20 Qs.

According to Bloomberg, consensus estimates are for Nike to have adjusted earnings of 70 cents per share and revenue of $10.44 billion.


Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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