Nike dominated news headlines the past few weeks with announcements of a massive layoffs, selling direct to Amazon and capping off Thursday with an earnings release. All of the headlines led to a volatile week of trading for the stock from a low of $50 to a high of $59.71. Despite the optimism, Nike still seems to be struggling.

Upon closer inspection of the earnings, there was one major positive with emerging markets growing 21% (18% with foreign exchange) vs. the previous year of -7% (12% with foreign exchange), but that is where the good news stopped:

Nike's largest market North America posted flat sales growth.
Nike's 2nd (Western Europe) and 3rd (China) largest markets both posted significantly lower growth rates when compared to the previous year.
Nike's gross margin in the quarter declined 180 basis points and for the year declined from 46.2% to 44.6% due to higher product costs and unfavorable exchange.

NPD's latest data on Nike's battle with Adidas shows tough times are still ahead for the mainline brand and Nike's iconic Jordan brand. You can't help but admire Adidas posting currency neutral growth of 31% in North America and 30% in China. Whilst Adidas is clearly the smaller rival with higher growth rates on a lower base, the market share gains are clearly being had by Adidas.

Will the announcement of selling direct to Amazon, laying off 1.2% of global employees and reducing SKUs lead to a turnaround? Questionable. Nike is already a top 3 brand in apparel/footwear on Amazon given the plethora of 3rd party sellers on the marketplace. Selling directly to Amazon will shift sales from those 3rd party wholesalers to Nike at a higher margin but will take a considerable amount of time. Layoffs provide meaningful cost savings in the margin department but SKU reductions will likely lead to leaving sales on the table.

Each of these turnaround tenants lack the growth needed to meet Nike's public announcement goal of $50 billion in annual sales by 2020. Keep in mind it took Nike 13 years from 2002 to 2015 to gain $20 billion, how will the company ever increase another $20 billion in 5 years time (2015 to 2020). Until Nike shows a significant improvement in growth of key markets such as China and Emerging Markets, $50 billion is a number that seems a bit optimistic.