Nike's earnings on Thursday beat modest expectations, sending the stock briefly higher, but the company quickly dashed investor expectations, with the stock plummeting as executives predicted a double-digit decline in third-quarter sales. fell.
Nike's new chief executive, Elliott Hill, warned of short-term pain as the struggling sportswear retailer tries to revive sluggish demand for its brands. Nike's stock price soared 11% immediately after the earnings release, but the gains were pared as Hill and Chief Financial Officer Matthew Friend tempered expectations.
In his first earnings call since taking over in October, Hill said Nike has “lost its obsession with sports,” refocusing its business on sports and shifting ship by selling more items at premium prices. I vowed to rebuild.
Nike's quarterly profit beat conservative expectations. Revenue also fell short of expectations as new versions of performance and running shoes attracted shoppers.
So far this year, Nike stock is down nearly 30%. Analysts said Hill faced harsh criticism and had a long way to go to regain lost market.
Hill said on the conference call that he will restructure Nike's retail partnerships to foster innovation and ensure that discounts and promotions are limited to traditional retail moments rather than the consistent rate that has been adopted recently. He said he would prioritize that.
“We've become too promotional,” Hill said, his tone animated and passionate. “The level of price cuts not only impacts our brand, but disrupts the overall market and the interests of our partners.”
As rivals launch more comfortable, more cushioned shoes, Nike is desperate to regain its dominance in the market, spending money to introduce new products like the Air Max 95 and introducing new products like the Jordan and Pegasus. It also promotes standard series such as.
Last month, the Hill company announced it would double down on its three running franchises – Pegasus, Structure and Vomero – by launching different versions of each shoe at different price points next year.
Mr. Hill is popular among retailers, who are optimistic that Nike will revive the third-party partnerships it withdrew in 2020 when it pivoted to direct-to-consumer business.
At the time, some retailers quickly filled shelf space with fashionable competitors like On and Hoka, while others struggled.
For example, Foot Locker continued to rely heavily on Nike in 2022 and 2023, purchasing 65% of its sports apparel from the company.
The company blamed weak demand for Nike shoes when it reported disappointing sales earlier this month. Foot Locker executives said at the time that they were looking forward to working with Hill.
Nike's second-quarter net revenue fell 7.7% to $12.35 billion. Analysts had expected sales to decline 9.41% to $12.13 billion, according to estimates compiled by LSEG.
Nike reported earnings of 78 cents per share, compared to expectations of 78 cents, according to analyst estimates compiled by LSEG.
“If you look closely, the numbers don't look good,” said Jessica Ramirez, senior analyst at Jane Hari & Associates. “But the situation is better than most people feared.”
