President Trump signature slogan is America First and many in the US would agree with the slogan. However, there is a balancing act with the slogan because the President believes companies should make the goods in the US and sell to other countries around the world which is why he imposed tariffs. Think about the concept, why would the other companies buy the US brand rather than the local or homemade brand?

In an article by Nicholas P. Brown and Juveria Tabassum of Reuters, Nike is based in Oregan and if you ever owned them is a good shoe to own, they also sell branded sportswear, with the swoosh on it. Nike sells to countries around the world, it typically does the design in the US and makes the shoes in Southeast Asia.

China accounts for 15% of Nike’s annual revenues. Second quarter footwear sales dropped 21% in China and CEO Elliot Hill said we need to reset our approach to the China marketplace.

Mr. Hill has been trying to restructure the company by refreshing the offerings and cut legacy lifestyle lines. Instead, margin pain is mounting, 2nd quarter gross margins fell about 300 basis points, hit by tariff costs and a glut of obsolete inventory.

In the US, Nike has multi-channels to sell their products, in China brands commonly operate their own stores instead of selling through 3rd party retailers.

On the digital side, sales were down 36% competing against brands such as Anta and Li-Ning.

CEO Hill noted we firmly believe our growth will come through sport, but the reality is we have become a lifestyle brand competing on price in China.

Morningstar analyst noted Nike gets some benefit of the doubt, at least for a couple quarters because sales in America were not that good when Mr. Hill took over, but the results have gotten better.

Recently Apple CEO Tim Cook bought a few million dollars in shares and Nike shares jumped up.

Linking to dividend paying stocks, companies have many strengths and if they are in retail they must have what consumers want and willing to buy, not what they have in inventory. That line makes retailer a tough market, but if you do it well, margins increase and profits come along. The other issue for retail is goodwill and that is where politics come along, sometimes it helps and sometimes it does not.

There are more questions than answers, till the next time – to raising questions.