Nike's shares climb
Nike shares climbed in early trading on Wednesday after filings showed that Tim Cook bought 50,000 shares of the sportswear maker in the open market. He paid $58.97 per share, taking his total holding to about 105,000 shares. At current prices, his stake is worth close to $6 million. The purchase stood out because of its size. Analysts said it was the largest open-market buy by a Nike director or senior executive in more than ten years. Investors took the move as a positive signal at a time when Nike’s recent results have raised concerns about its growth outlook. Cook has been on Nike’s board since 2005 and is one of its most senior independent directors. His decision to increase his stake helped lift market confidence, even though the company’s stock has fallen in recent weeks.
Change in marketing approach
The share purchase comes shortly after Nike reported weak quarterly results. The company said margins declined again and sales growth in China remained slow. China is a key market for Nike, but demand there has been affected by heavy discounting and strong competition from local and global rivals. Since becoming chief executive, Elliott Hill has focused on bringing Nike back to its core strength in sports and performance wear. The company is investing more in running and athletic products and cutting back on slower-moving lifestyle lines. Nike is also changing its marketing approach to reconnect with athletes and younger consumers. At the same time, Nike is rebuilding ties with major wholesale partners such as Dicks Sporting Goods. These steps are meant to improve visibility and reach more shoppers. However, the shift has increased costs and added pressure on margins, which have been falling for over a year.
Tim Cook
Tim Cook became Nike’s lead independent director in 2016, after co-founder Phil Knight stepped down as chairman. Analysts say Cook remains close to Knight and has advised the company on major decisions, including the appointment of Elliott Hill last year. Despite Wednesday’s gain, Nike shares are still down nearly 13% since the company reported earnings on December 18. The stock is also heading toward its fourth straight year of decline.
