Nike shares rose 5% in early trading Wednesday after Apple CEO Tim Cook doubled his personal stake in the sportswear maker, increasing his bets on turnaround efforts to reduce margins led by CEO Elliott Hill.
Cook, who has been a member of Nike’s board of directors since 2005, bought 50,000 shares at $58.97 each, according to a regulatory filing. As of December 22, he owned approximately 105,000 shares, which are currently worth almost $6 million.
It was the largest open market stock purchase by a Nike director or executive and possibly the largest in more than a decade, said Jonathan Komp, an analyst at Baird Equity Research.
“We view Cook’s decision as a positive sign of progress under the leadership of CEO Elliott Hill and Nike’s “Win Now” actions,” Komp said.
The purchase comes days after Nike reported weaker quarterly margins and weak sales in China, even as CEO Hill attempts to revive demand through new marketing and innovation plans focused on running and sports, while phasing out lagging lifestyle brands.
He has also attempted to repair Nike’s ties with wholesalers such as Dicks Sporting Goods to increase visibility among shoppers amid stiff competition from newer brands.
However, the strategy has hurt Nike’s margins, which have been declining for more than a year, while its efforts to regain its leadership position in discount-friendly China appear to be failing.
Nike shares have fallen nearly 13% since it reported results on December 18 and are on track for their fourth consecutive year of declines. On Wednesday they were trading at $60.19.
Cook has been a lead independent director at Nike since 2016, when co-founder Phil Knight stepped down as chairman.
The Apple CEO “remains extremely close” to Knight, Komp said, adding that he has advised Nike on key strategic decisions, including Hill’s appointment last year.
Intel board director and former insider Robert Swan also bought about 8,700 shares for about $500,000 this week.
With information from Reuters.
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