The Canadian Investor - Couche-Tard, Blackberry, and Nike: Who’s Most Likely to Bounce Back?

Episode Date: July 10, 2025

In this episode, we dig into a busy week of earnings from three very different businesses navigating challenging environments. We start with Couche-Tard, where modest merchandise growth in Canada and Europe couldn’t offset softness in the U.S. and fuel sales. Next, we check in on Blackberry, which posted its first profit in three years while questions about the future of the company still remain front and centre. Lastly, we break down Nike’s rough Q4. Revenue and earnings are way down, margins are getting crushed, and inventory problems persist. But there are a few signs of sequential improvement.  Tickers of stocks discussed: NKE, BB.TO, ATD.TO  Get your TSX Meetup tickets here! Get your Calgary Meetup Tickets here! Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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that it's a business. Just my reminder to people who own safe Google's, don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian Investor Podcast.

We are back for a news and earnings episode. It will likely be a bit shorter one this time around because there's not that much going on. We're recording this one as well, a bit in advance. So typically we'll be recording like a day before the Thursday release. We're recording this one on July 2nd So keep that in mind if we're missing a little bit of news as we are trying to record a bit more in advance get some episodes in the bank because I will be I'll be heading out to Calgary and

Also, just to make sure we get a little bit of time off from recording I'm sure people can appreciate but not to worry we will have some episodes coming out regularly, some fresh ones. They are just being recorded a little bit in advance. So before we get started Dan, happy Canada Day. Yeah. Did you do anything fun to celebrate or just did some drywall? Yeah I spent the entire day putting up drywall. My back. I mean kudos to people who do that every day. I don't know if I could handle it, but yeah coming along. It should be a decent episode. I mean there's not much news, but there's also some couple pretty notable companies we'll talk about today,

especially one is very popular among Canadian investors. Yeah, definitely. So today we'll be talking about Cousteet's earnings. We'll do Blackberry as well. This one is probably, might be a little bit of a snooze fest, but that's okay. I still went through it. And then Nike earnings, which was pretty interesting, not great as most people probably expected from Nike.

So it'll be interesting to go over that. And then we may have the last little segment depending where we're at in terms of time but it will likely be a bit shorter episode and then we'll be back next week for some regular length episodes. So let's get started here, Alimentation Couchtau, how did it look for them? Yeah, so I mean they still continue to struggle quite a bit, but it was a pretty reasonable quarter, all things considered. Earnings are down by around 3.6% year over year. Revenue taking quite a bit of a hit as well, down 7.5%. I mean, they're just right now, they're kind of feeling the impacts of a slower economy, I guess I would say,

plus just, you know, the overall impacts of inflation over the last few years, I think making it a bit difficult for consumers to justify paying gas station prices for goods. I don't know if you've been to a convenience store recently, but the prices are just, they're ridiculous for, you know, snacks or anything. Like somebody who, you know, maybe five years ago or so, you know, they're having a party or something and they need some stuff they might stop by who you know, maybe five years ago or so want, you know, they're having a party or something and they they need some stuff they might stop by, you know, like a Circle K because it's you know, that's an element of convenience there. But now it's like, I think it's pretty close to 10 bucks for a bag of Doritos. Are you serious?

Yeah. Oh, that's like nine something where I'm at, which is just, I mean, you can go to Walmart and get them for four bucks So yeah, I mean I I bought a bag of like no-name brand chips at one of the Loblaws discount stores and I think it was a dollar fifty for like the big bags Obviously, it's not Doritos not the same brand but I mean I like Doritos but not for ten dollars Not for that price. Yeah. Well, and even when I was in the US for a bit,

they were like $7 US for a bag of chips. So I mean, this element is definitely hitting the company. There's no question, along with just an overall slowdown in the economy overall. On the merchandise side, comparable sales in both Canada and Europe increased by 3.5%, but margins also dipped in both those countries by around 70 basis points, 0.7% each. The only difficulty here is the company's largest market, which is the United States is still seeing same-store salesines and market margin contraction there.

So they mentioned one of the main drivers in Canada has been alcohol sales in Ontario due to some change in legislation there. I imagine Ontario allowed alcohol in convenience stores. That's probably what it is. Yeah, that's it. So convenience store groceries, I think some grocers had it before, but yeah, it's been been I can't remember exactly when it happened But it's definitely been around for maybe like six last six to twelve months. I would say so Yeah, they had to pay a big because they used to be

Amongst other things like you could only get it into the LCBO which is the liquor liquor store Or you could only get it at the beer store if you got actual beer. And now I think they had to pay some kind of buyout because the beer store was like this weird public-private partnership with some big brewers. So they had to pay a buyout in order for them to be able to start selling in convenience stores. Yeah, I know here there was a lot of, I know they had discussed doing it here,

but there was a lot of, you know, blowback from a lot of liquor stores, obviously, because this would be detrimental to them to be able to sell that stuff, like, you know, in convenience stores. But Alberta, I guess it's the liquor stores are all private, right? Yeah. And they have a license type of deal or? And I mean, a type of deal or? And I mean a lot of them are right beside gas stations.

So if you end up allowing the gas stations to sell liquor, it would probably put a lot of those places out of business. But they also mentioned that nicotine sales are softening due to some weakness and removal of popular products. I mean, I don't know. I would imagine what they're talking about is those Zins and those Zonics. They were removed from gas stations and they sent them to pharmacies. So the government of Canada put in those rules that took those out, which those like in terms of nicotine usage are some of the most like they're just exploding

in popularity. So they didn't outright say what it was, but I would imagine this would be what it was. They were were removed, I believe, last year, late last year. So this is kind of hitting them on this front. Plus, I mean, fewer people are smoking, things like that. And nicotine is a pretty big driver for these gas stations overall. On the fuel side, struggles pretty much all around, which does make sense in the current economy. US fuel sales declined by 1.9%, Europe by 0.6%, and they increased by 3.6% in Canada.

Margins were a bit stronger, which did help offset some of the issues. But again, the US company's biggest market still continues to struggle on both margins and just overall fuel sales. They open around 110 stores on the year and they have around a thousand in the development pipeline. I'm pretty sure 110 stores and what I say, I guess what I mean by on the year is this. I'm pretty sure this was their Q4, so they closed out fiscal 2025. I'm pretty sure this is a relatively low store count opening on the year for somebody like

Couchetard. They spent $518 million on share buybacks on the year. They purchased 8.7 million shares. They raised the dividend by 14.3% on the year as well. So it's aggressively pursuing buybacks and dividend growth during this time. I mean, the buybacks make sense, you know, if you believe we're in a bit of a cyclical low here, obviously it's better to buy back now than it was, you know, when they were $80 a share. And one of the main things here is the seven

and I acquisition. And it was pretty funny. Like I made a video on this. It had to be like six months ago. And a lot of people were saying, oh, the deal's dead. The deal's dead. It's not gonna happen. It looks like it's, you know, pretty much on the way to happening. I mean, they've, it's nothing's guaranteed,

but they signed an NDA due diligence is underway. They state they have a roadmap to navigate the regulatory issues that would cause as well, because there was a lot of, there was a lot of hurdles in that regard to acquiring that large of company, US regulatory issues, things like that. And they do expect they're going to come to a decision

as to whether or not to pursue this sooner rather than later. And just overall, I mean, my stance on the entire thing remains the same. I mean, Cushart has been able to navigate smaller Tachin acquisitions very, very well over its lifetime. However, this one is material. I can't remember the cost of it. I think it was like almost the entire market cap of the company. It was something like $60 billion they were looking at. Yeah, it makes you wonder a little bit too, like these kind of environment might be good

for making purchases when the industry is not doing all that well, clearly. They're not doing all that well with some margin pressures because of the macroeconomic environment. But my sense is that they're probably going to end up overpaying. Maybe we'll see, right? It doesn't really make a whole lot of sense. I think if you're a CUSHTA, you're in a good financial position, you should leverage that to be able to make some smart acquisition in an environment where it's not the best environment for convenience store operators. If they end up overpaying for it, not quite sure that makes a whole lot of sense given this kind of environment because they could really continue to struggle now for

a couple years if not more if things kind of stagnate and you're not seeing the economic recovery that a lot of people are hoping for in the next few years and then you have that extra debt these extra store count probably some shared dilution on top of it. I'm just I'm kind of questioning a little bit the the strategy unless they get a really good deal, but seven and I They've been very reluctant from the beginning. So I can't imagine them approving a sale That would be a good value for kushtal, but who knows maybe I'll be surprised Yeah, they've been pretty stingy over the last while and obviously it's taken a very very long time to get the deal done But yeah, I mean you're gonna see big levels of debt taken on, you're going to see a lot of

shareholder dilution for the company and who knows when we get out of this environment. I mean, I think a lot of people, because Custard was a very popular company over the last decade or so and I don't really think that a lot of people understood how cyclical this company would be. I mean, you know, when the economy gets rough, first off, fewer people travel and the bulk of this company is fuel sales. And then, you know, a lot of the time, the higher margin profitable merchandise sales, they only really happen if somebody purchases fuel. So, I mean, you're obviously getting less foot traffic into the gas stations and ultimately that's going to just hit everything overall.

I still think it's a very good company. It's just one that's like, there's nothing operationally this company could do to prevent the struggles. It's just, it's just the state of the economy right now. And I think maybe the last thing I'll mention is I noticed you said, I still think it's a very good company and I'm not debating that, but I think it's really important for people to know A good company doesn't mean it will be a good investment. These are two very different things You can have a pretty bad company that trading at such a discount that can end up being a quite a good investment

So I think that's really important for people to zone in is a good company does not mean it will be a good investment if you're overpaying for what you're getting. And I don't know, I think it's to me, alimentation couture right now, it's more of a wait and see. I just don't think the valuation like it's cheaper than it has been, but I don't think it's attractive by any means whatsoever. Yeah, I mean, it could stay in the doghouse for multiple years if we don't see, you know, a pickup in overall activity. And I mean, declining rates should help in that regard, I guess, but I like it.

They figure now we won't see that in like this is a Canadian company, but the bulk of its like your US is its is its main operation. I mean, I think the majority of the revenue is generated down there. So they, you know, declining rates there might help a little bit. It's like your US is its main operation. I mean, I think the majority of the revenue is generated down there. So they, you know, declining rates there might help a little bit, but I mean, they're not expected to see those

until potentially next year now. Okay, no, that's a good overview. Want to buy a stock, but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares, you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem.

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plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked.

And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning, Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there.

I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the App Store and I'll see you there. Now we'll switch over to the one we alluded to. So Blackberry. Blackberry, I mean, every time I don't follow this company all that much and clearly...

I don't either. What's every time I don't follow this company all that much and clearly, what's that? I don't either. I mean, yeah, I got a lot of questions on it when it was a Wall Street bet stock back in the day like during COVID but I don't follow it too too much. Yeah, exactly. Look, at the end of the day, every time I look at it, it always kind of looks the same. It's just a declining slope, unfortunately. If you look at

the recent quarters or recent years, no matter how much you look, it's been just think about it. If you're not enjoying TCI and seeing the graphics here, basically just think about revenues being higher in the past and then slowly trickling down. That's pretty much the story behind it. You want up and to the right, not down and to the right. in the past and then slowly trickling down. That's pretty much the story behind it. You want up and to the right, not down and to the right. Yeah, exactly. So it's not really what you'd be looking for. But I haven't said that, look, revenues were down 1.3% over a year. It just seems like, like I said, it's always the same thing for me when I look at BlackBerry, maybe once or twice a year. They've been on a steady

slope down over the last 10 years and despite changing CEO there was John Chen until I think a year or two ago. I can't really remember when the new CEO came in. It was always this turnaround play turning around or going away from the traditional research in motion BlackBerry headset. They rebranded to Blackberry. Now the two main lines of business are the QNX operating system, which is used in the auto sector, but also another industrial application.

QNX saw 8% growth during the quarter. And if you look at their earnings release, it always looks like they're turning things around every single time you're looking at it. They also their other big segment and it's really those two segments the other the rest of the business is marginal. There's the secure communication segment which is encryption technology for various communication tools used by the enterprise and governments. They didn't provide the year-over-year increase but said that the annual recurring revenue was stable. So already they're a little bit of a

head-scratcher why they would not provide that and just say the AR is stable. Probably shows that maybe it wasn't as strong as they wanted it to be. And that's a actually a good note for earnings release when you see companies like not mentioning something or just kind of omitting to mention something, oftentimes it's because not necessarily they're trying to hide something, but maybe it didn't meet their expectations.

They're probably trying to send your eyes elsewhere, I would say. Exactly. A lot of, yeah. Yeah. Yeah, I looked at, so BlackBerry revenue from Since 2011 so we're talking what that's 14 years now. They posted year-over-year declines in revenue for 12 out of those 14 years. Yeah, exactly. Yeah, they went back if you go back to 2016 They had a bit more than 2 billion in revenue I think that obviously that most likely I would think had some

headsets in there some Blackberry devices which were still used quite a bit by back then by Enterprise but specifically government for security reasons. I think that was one of the big parts. It was 2 billion back then Dropped to 1.3 the following year. So I would assume this was again related to the headsets there, where the handhelds, sorry, I keep saying headset, but the handhelds, the phones, let's just say the phones, the smartphones. And then it's just been a slow decline since then. Some little bumps here and there.

I think that was probably related for them as selling intellectual property and stuff like that. Patents, I know they sold a bunch over the years, but it's been essentially a downward slope. So I was mentioning 1.3 billion back in 2017, down from 2.1, and then the last 12 months, they're looking at 533 million. So you can see that declining slope there. Yeah it's uh it just hasn't really been a good company whatsoever to own for a very long time. It got uh it just got killed by the other smartphone producers kind of just ended the

business and now they've just seemed to be trying to do these trends. There's always a story with the company about how you're gonna to, you know, new businesses and everything, but it just, it just hasn't worked out. Yeah, exactly. And the QNX we'll have to see, obviously it's been used for some time now in the auto sector. We'll have to see whether it picks up in for other applications. For the Secures Communications segment, we were talking about that. Like to me, that's something that could very well be eroding pretty quickly when you start

thinking and I'm not an expert in this I'm just thinking about the the big players are in this space there's some players that's focused specifically for this security communication segment that's their main line of business is online security. I can't see it. I don't know. I have a hard time believing that some of these players will not come after what some of the contract that BlackBerry has and a lot of these competitors have way more resources

than them too. So something to keep in mind, one of the positive is that they achieve gap profitability. So gap is generally accepted accounting principle, which is usually what you're supposed to use for your financial statements. If you're listed in the US and Canada, it's IFRS. But regardless, they achieve profitability, not on an adjusted basis, on actual gap metrics. Another Another positive note and may I add that it was actually just slightly positive. So they eeked out a profit is probably the good thing. Another positive note for them is that they generated a little bit of free cash over the last 12 months. The share count is a concern here. So they reduced it ever so slightly in the most recent quarter but if you

zoom out 10 years it has increased 14% and the last five years it's up 7%. They bought back a bit of stock during the quarter and announced a share buyback program which kind of baffles me when the business is struggling as much as it is. I guess you can make the case that the stock is trading pretty cheaply, but at the end of the day, isn't there some better things to take that money and invest into the business? That's always where my mind goes. And they increase their guidance outlook a little bit for the full year, but unless they hit the top end of that range, revenues will be down compared to last year. So not that great. I mean, at the end of that range, revenues will be down compared to last year. So, not that great. I mean, at the end of the day, if you're interested in this business, you're really betting on the

turnaround play, which they've been saying for the last 10 years. So, I think you can probably tell where I stand with that. Yeah. Yeah. I mean, they're supposed to earn, well, they're expected to earn 13 cents next year. So, at $5.81, I mean, that's not cheap by any stretch. So I mean, I don't know. A buyback plan does seem a bit odd, but yeah, I mean, this is just, it's a company that's been around for a very, very long time, but just like, I don't see the attractiveness in it whatsoever. I don't know. And like I said, I know back in, like during the COVID, like during the whole Wall Street meme stock thing, I mean it launched, it went up to $32 a share, but then

it's just been a downward, downward tailspin since. Yeah. I mean, you really wonder, right? When management authorizes a share buyback in the business is really not doing all that well like Are they really thinking you know what like? Whatever we try to do with this cash It's probably not gonna work so we might as well just return money to shareholders like I don't know the reasoning behind it Yeah, they don't really have any money though really I mean to buy back They don't have a lot of money to buy back a ton of shares so yeah I don't I don't really get it. Yeah I'm just trying to look as we're talking here so. They got a decent amount of cash I think but they're only generating like 5 million in free

cash flow so I mean I guess they do have a lot of cash on the balance sheet to buy back shares so maybe. Yeah 276 million right now cash and cash equivalents. So yeah a little bit of cash and I guess they're maybe those tiny profits they're gonna buy back shares but again yeah I just don't see the direction I'll be honest but we'll see maybe next time next time we do it there they're gonna start turning things around but yeah. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses.

Want to put $10 into a stock trading at $100? No problem. Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for US fractional shares in ETFs. It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. Use code TCI and you get $50 to get you started. Do you keep hearing about these all-in-one ETFs lately? Well, I have some exciting news. BMO ETFs just cut the fees on their flagship all-in-one ETFs

to 0.15%, making them one of the lowest cost options in Canada. That's right, more value, same smart diversification, all in a single ETF. Whether you're just starting out or simplifying your portfolio, BMO all-in-one ETFs make it easy to invest with confidence. Just Zed it and forget it considering ETFs like ZEQT, BMO's all equity ETF or ZGRO, BMO's growth ETF. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing.

This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff

like learning, Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there and follow me, search me up. Some of the YouTubers and influencers and podcasters

that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Let's move on to the next one here. Nike earnings, a company that has been a lot in the news in the last couple of months, especially with the tariffs. Yeah, so it was a pretty rough quarter from Nike, but I think it was

not as rough as people had expected. And then actually, I'm pretty sure they did pretty well post earnings. I think it double digits, at least it increased. But revenue was down 12% year over year and the entire year it fell 10%. So I would imagine they closed out their fiscal year as well because they talked a lot about full year numbers. So yeah, they did. Yeah. Yeah. Earnings per share fell 75% year over year and a total of 27% for the entire fiscal 2025 year. Gross margins 440, 4.4% basis point or sorry, percent hit and inventories remain relatively flat.

Margins were largely impacted by markdowns, probably from the company trying to move some stale inventory. I mean, again, there's probably a lot more followers of a company like Aritzia than Nike on Canadian investor podcasts. Aritzia had the exact same issues where their inventory kind of bloated up there and they needed to mark a ton of stuff down and they went through like a entire year period where their margins took quite a bit hit. They do expect it to be, you know, to stabilize moving forward, but I mean, ultimately markdowns are not a good thing, especially like for a fashion company because, you know, a lot of these clothes go out of style very quickly and and if you haven't moved them out of your inventory you're

gonna have to move them for you know clearance sales essentially there really isn't a single segment of the business that's performing particularly well so sales were down 11% North America 10% in Europe in the Middle East 20% in China and 3% in Asia Pacific Latin America and. And I mean, there are no doubt in the midst of a bit of a business transformation here. I mean, they're trying to get rid of a lot of older brands. And as I mentioned, they do expect the inventory situation to be resolved in the first half of fiscal 2026. So again, in the next six months here, maybe that's what caused a bit of a pop and share price. They do have a new Amazon partnership they've launched, which should

see its products return after six years or so. So back in 2019, they removed their products from Amazon because they felt that the direct to consumer path was the better path to grow. I mean, it looks like this didn't turn out to be the case. I mean, it might've done well leading up until now, but now they're trying to get back on Amazon to probably increase their reach and probably just kind of realizing the popularity of a platform like Amazon and how much they could sell. Well, increasing the top line too, right? I'm sure their reasoning was that it would help margins to go DTC and not use the Amazon route.

But then if you're looking here at footwear revenue and apparel, which is 95% of the business, I know they have equipment, but that's like a tiny part of the business and they've both been very much struggling. So you can see that peaking around like 2023, 2020, part of 2024, and then it's just a pretty massive decline. And those are the two most important parts of the business. And I don't know if you listened to the call, I listened to part of it and they were saying really, they're trying to focus on China and North America to try and get those sales back up and going because they're two really important markets and they've both been struggling. Yeah, I mean that for me, I mean, if I was going to buy a pair of shoes that were that expensive, I don't know if I'd buy them on Amazon.

I don't know. I guess you can return it. Yeah, I guess you can return them. But I mean, like I would have no problem buying like a $40 pair of shoes on Amazon, but if I'm laying out like 250 bucks, I'd probably be going through like to the store. But I mean, that's just me. I'm not sure exactly how well they did in Amazon on Amazon when they had done it before. Obviously not that good because they canceled the deal, but they're back on. And now the one thing, so on a sequential basis, it's a pretty big improvement in terms of quarterly sales from the last quarter. So there is a potential that, you know, there's there's some sort of bottom from the company here. Way too early to say. But I mean, it pops 10 percent on the results, even though they were fairly bad. So obviously, the market is I mean, this stock is beat up.

No doubt. I don't know what it's off highs. It's got to be. I think it was trading at one hundred and sixty some dollars at some point. Now it's down to what 75? 75 yeah and if you look at the last five years, yeah almost 60 percent. Yes almost 60 percent drawdown. It was like at a closest 70 percent drawdown at the bottom. Yeah that's crazy.'s crazy. I mean, they release guidance so they expect revenue at the best case to be flat and at the worst case down a low single digit percentage. I don't know if this was, I didn't write this down here. I don't know if this is next quarter's guidance or fiscal year. Next quarter. I don't think they provided guidance for the full year. Next quarter, I think, yeah, their expectation is down mid single digits, I think, like as the most realistic

one. And another 350 to 425 basis point hit the margins, which they said 75 basis points is tariffs. They didn't issue any sort of earnings guidance for the next quarter, but I mean, if you have declining revenue and declining margins, your earnings are going to be hit. There's no question. And I mean, I think the underlying numbers here kind of just tell the full story. Very expensive retailer in an environment where people just won't pay the prices for the items. And we also have a company that, you know, they outsource the vast

majority of their production to, you production to tariff impacted companies overall, or countries, sorry, overall. Yeah, and they mentioned on the calls right now, their US sells 16% of the goods actually come from China. So obviously, they're heavily impacted by tariffs. They do want to keep production in China, but they would probably use that for other markets around the world because of course, the US is not the only market. They said they would probably use that for other markets around the world because of course the US is not the only market. They said they want to get that sourcing from China down to high single digits for the US, so they are repositioning themselves.

And on the inventory part, they did say, yeah, it still remained elevated on the call, but like you said, they were optimistic about getting them at more normalized level by the end of the day. If you read between the line, I think there's a risk that they'll need to do some more discounting and potentially take an even bigger hit to margin during the next two quarter to get rid of that excess inventory. So that's always something you have to keep in mind when inventory levels are high. That's what companies will have to do because if they don't and they keep those inventories

for too long, at some point, they'll have to discount it even more. Or just completely write it off. Exactly. So it's not the best situation. But like you said, this stock has been beaten down pretty heavily. If you're looking at just the valuation here, still pretty expensive. Why? I thought it'd be cheaper. Well, I would imagine it's expensive. I guess the earnings have dropped so much, right?

Clearly, the earnings have dropped way faster than the price because you're still looking at trailing valuation. I guess that would make sense because sales are declining of 33p I guess that would make sense because sales are declining of 33 P and then a forward valuation of 42 P so it's even more expensive. Yeah, which I guess it makes sense because earnings are declining. Yeah Yeah, they're supposed to go from What is it $2 16 cents last year? They're supposed to earn a lot Expectations are for about a buck 70. So I mean they're gonna continue to decline But then if you look forward even more than that, they're expected to rebound in a big way.

But I mean, predictions that far out are, I don't want to say they're an outright guess, but they're very, like they're subject to change very, very quickly. Yeah. And the best of times and now we're seeing with everything that's going on with the U.S. on the tariff situation, obviously, like it it's been what like six months now of Trump's roughly and All we've seen is just so a lot of flip-flopping. I mean, it's like, yeah it's like a fish out of water right like that's how much flip-flopping there has been it's been pretty insane just a Just the amount of back-and-forth which makes it very difficult to try and project even

more so a company like Nike that will be impacted by tariffs, whatever they are. And that's the issue. You don't really know what they're going to be. But the bullish case is that for those looking for a bullish case, it's probably you're betting on the brand, right? You're betting that the brand is so strong that they'll be able to to turn things around. I mean they are focusing on some core products that's what they said. They have this new strategy, this win now strategy, putting more emphasis on the near term. They said they were

putting too much focus on long-term products development and not enough on the nearer term. So they're trying to shift that around. I guess you have to be careful because you also want to think on a long-term basis, but maybe balancing those out. So that's probably the bullish case is you're just betting that the brand is just too strong and it will recover.

The bearish case is that the brand never recovers. You're paying already too much for it and it might just stagnate for years to come. Yeah, I mean that's, yeah, well said. I mean you either have a recovery in the brand and it's strong enough or you just have a brand fallout and those estimates in 2027 and 2028 will probably not be as attractive as they are. Nike, like the brand is very strong. Like I can't imagine it just continues to fall out, but it's also, I mean, they're just people just aren't interested right now in paying, you know, the levels of prices

for their clothing. So it's a combination of both things. I mean, I was chatting with a few people and I mean, I got a Nike hoodie for Christmas the one year and I had my Kirkland hoodie. I mean, guess which one is still going strong? I'm gonna say the Kirkland one. Yeah. It's a $30 hoodie versus probably like a $100 hoodie. I don't know. I don't see the value in it but I also don't like I've never been much of a Nike guy.

Maybe their products are extremely high quality. I'm not sure but the one I had certainly wasn't. I've had some in the past. I've never been really Nike all that much. I had a phase maybe 10 years ago where it was a lot under armor. I liked their clothes but then they kind of went away from that a little bit and more past five, six years I really liked the Lululemon, the quality of it. Like I don't mind paying more if it's good quality and maybe that's where I

agree with you is I never felt like I got what I was paying for in terms of quality. If it was maybe half the price for Nike, that'd be a different discussion but just for the price, it never felt like it was that great a quality. It just felt like I was paying for the brand name. You're paying for the check mark yet. Yeah, exactly. So, no, I think that's a good overview. I think it'll just be a short episode today. We'll be back with some more kind of 45, 50 minutes episode.

It's a bit slower again on the earnings front, but we did want to keep the content coming for everyone. So we do appreciate all the support we get. If you're listening to this, I'm still, I think I'm still in Calgary and probably leaving on this day if you're listening to this on the day it's being released. But hopefully for those that will be coming to the two events that we have first in Calgary and then in Toronto hopefully it'll be a fun event. I know I'm talking now the event will have happened so it's a bit weird but I'm looking forward to experience the Stampede, never been there. Yeah it's quite the experience it gets old after a

while but it should be a fun event. I guess if this is yeah post event let's hope we had fun. The Canadian Investor podcast should not be construed as investment or financial advice. some more regular content.