I’m listening to quite a few “extra” ER calls these days - especially during long driving trips. (If you’re a geek like me there is a Spotify channel that you can use to make it easy - you can get it here:
Nike Notes
The company continues to execute on its more D2C-based strategy and is still working toward the ability to serve a customer via any channel or method they like. Some terms they use that I like are “brand heat” and “separation” when talking about products and execution.
The supply chain continues to be a major challenge for Nike. Inventory levels are elevated and 65% of it is “in transit” rather than in stores. Slow shipping also means that seasonal merchandise often arrives past the best “sell by” date which will increase the need to use promotions.
Two companies that got called out in their strategy were SAP SAP 0.00%↑ on the back end and Adobe ADBE 0.00%↑ for customer-facing initiatives. As the customer experience is now digital it makes me wonder if Adobe is in a better position than a company like Salesforce CRM 0.00%↑.
Nike continues to innovate heavily and it sounds like there are some new materials coming for apparel that could be a major boost for them beginning in Q3. They are making efforts to get closer to a “circular economy” which I expect will be a big theme for years to come.
FedEx Notes
Here is a supply chain nugget that I’ll quote:
The Europe to Asia lane is estimated to recover in Q1 calendar year '24, and belly capacity on trans-Pacific airlines is estimated to recover in Q3 calendar year '24. Commercial capacity between Europe and Asia is not expected to recover until Q1 of calendar year 2025.
That suggests that companies might need to continue to focus on shipping challenges to support their strategies for another year or two.
They are shifting their strategy a bit to drive what they call “revenue quality” which is less price sensitive. One of the implications of this to me is that premium shipping costs are likely to remain higher which will have an impact on consumer companies and e-commerce platforms.
They are buying some EV units from a company called Brightdrop. It’s yet another EV player to keep an eye on. They are still private. Here’s the vehicle FedEx is buying - the Brightdrop Zevo.
In discussing their guidance they said directly that they see fuel costs lower going forward. There are still plenty of energy bulls out there claiming this pullback should be bought. It could be that FedEx has contracts and hedges in place that make their comment unique but I was surprised by how direct they were.
Given their scale, I may take the time to review the information shared in their Analyst Day today in Memphis for more clues about what they see coming.