Nike Is Partnering With Kim Kardashian to Take on Lululemon. Can It Make the Stock a Winner?

Key Points

• Nike launched a new product line with Kim Kardashian's Skims.

• The new collection is part of a broader collaboration between the two companies.

• The move should help Nike improve its women's business, a key priority.

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It's been roughly a year since CEO Elliott Hill took the helm at Nike (NYSE: NKE). Hill inherited a sportswear giant that had seemed to lose its way with his predecessor, John Donahoe. Under Donahoe, Nike overinvested in the lifestyle segment, meaning gear designed for everyday wear, and pulled back on innovation in new performance footwear and apparel that appealed to athletes.

The company also shifted too much of its marketing budget to performance marketing, letting go of the brand campaigns like "Just Do It" that have helped make the company so famous.

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Now, Nike is making a bold, creative move. The Swoosh is teaming up with Kim Kardashian's Skims to launch a new line of activewear, which was set to debut on Sept. 26.

Image source: Nike.

What is Nike doing here?

Nike had originally announced the partnership back in February, saying the two companies were launching a new brand for women: NikeSkims.

Nike sees the product line as a combination of performance and style, and said the brand will "set a new standard in the global fitness and activewear industry."

The new collection has four styles, including Matte, Shine, Airy, and Vintage Seamless, and leverages Nike's Dri-Fit technology. All together, the debut product line offers more than 10,000 different looks and they are now available on each brand's website and at their flagship stores in New York and Los Angeles.

The product launch gives Nike a new inroad into the large women's athletic apparel market, and brings it in closer competition with brands like Lululemon, Alo, Fabletics, and others. Top Nike athletes like snowboarder Chloe Kim, sprinter Sha'Carri Richardson, and tennis star Serena Williams are being featured in the marketing for new product line.

Women's products have been seen as a weakness for Nike in recent years, and Hill has talked up the opportunity and called it a priority for the company several times. It's put WNBA stars like A'ja Wilson and Sabrina Ionescu front and center in its marketing.

Will this drive Nike's comeback?

Nike's partnership with Skims, which was most recently valued at $4 billion, also includes collaborating beyond the new product line. Skims will get access to Nike's manufacturing and development infrastructure, while Nike is hopeful that Kardashian's halo and the brand's fitness and lifestyle focus can help expand its appeal.

The partnership alone may not be material to Nike's results over the coming quarter, but it's a good example of the kind of changes investors want to see under Elliott Hill. New partnerships, new products, and targeting a demographic that it's historically underserved are all the kinds of strategies that should help shake up the business and drive improvements over the long run.

What's next for Nike

Investors will get an update from Nike soon, as it's expected to report fiscal first-quarter earnings on Sept. 30.

Nike stock has bounced off of recent lows, now up more than 30% from its bottom in April, on signs that the worst is behind the company in its recovery as it expects sales growth to pick up this year after an abysmal fiscal 2025 that included a 10% decline in revenue.

For the first-quarter report, analysts are expecting revenue to decline 5.2% to $11 billion, and for earnings per share to fall from $0.70 to $0.27. That should be a low bar for Nike to overcome, but discretionary spending has been weak in the athletic apparel and footwear market, especially domestically, as recent reports from peers like Lululemon and Deckers have shown.

Beyond the numbers, investors should keep an eye out for other product news and launches as Hill is aiming to increase the company's product velocity.

Whatever happens in the first-quarter report, Nike should eventually get back to growth, but investors are eager for that to happen sooner rather than later.

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Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Deckers Outdoor, Lululemon Athletica Inc., and Nike. The Motley Fool has a disclosure policy.