Investors have had a rough ride with Nike (NYSE: NKE), On Holding (NYSE: ONON), and Deckers Outdoor (NYSE: DECK) this year, with each stock down between about 25% and 43%. The Federal Reserve just lifted its benchmark rate at the September meeting and signaled it is prepared to stay tough on inflation, which continues to put pressure on consumer names that depend on discretionary spending. If the Fed keeps hiking, the stock that looks most durable to me in this trio is Nike.
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » The latest Federal Open Market Committee decision raised the target range to 3.75% to 4%, the first move higher since 2023. Higher rates raise the discount rate on future earnings and hit companies that depend on aggressive growth assumptions. In my opinion, that is part of what has dragged down On Holding and Deckers Outdoor, which live closer to the "hot growth story" end of the spectrum.
Nike sits in a different place. It has years and years of brand equity with athletes, fans, and casual wearers that does not vanish because borrowing costs are higher. The swoosh shows up on youth leagues, global tournaments, and everyday errands, which gives Nike a base of demand that feels more like a habit than hype.
When rates stay elevated, that kind of deep brand relationship matters. Nike's stock has taken a beating this year, but the company is making bigger changes that could matter well beyond the next quarter. In April, Nike laid out a plan to streamline factories and logistics, roll out technology faster, build skills internally, and tighten relationships with suppliers and partners.
It is also concentrating its technology teams around its Oregon headquarters and its India technology center, while updating Air Manufacturing Innovation sites in Beaverton, St. Bringing materials development closer to footwear and apparel supply chains could help Nike move products from concept to market faster. This is all proof of my longer-term case for Nike: Even in a tougher consumer and interest rate environment, it still knows how to be relevant with products, cultural attention and sales.
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