Nike withdrew its full-year sales forecast on Tuesday and also missed quarterly revenue expectations, sending its stock price down by the hour as the sportswear giant struggles with weak footwear demand amid stiff competition from emerging brands around the world. It fell 6% outside.
The company previously expected annual sales to decline by a mid-single-digit percentage.
The company has launched new product lines like the Air Max Dn and Pegasus 41 to revive demand, and has yet to realize the sales benefits of its rush to innovate.
Analysts also say Nike has done little to stimulate demand, primarily in the U.S. and Europe, and win back market share from brands such as Deckers-owned Hoka and Roger Federer-backed On. , it is also pointed out.
The sportswear giant has been hit by weak consumer spending in China, which led to a 3% decline in sales in Greater China. Sales in the United States and Europe each decreased by 14%.
The company's first-quarter net revenue fell 10.4% to $11.59 billion. Analysts had expected sales to decline 10% to $11.65 billion, according to analyst forecasts compiled by LSEG.
However, Nike reported that its gross profit margin rose 120 basis points to 45.4% as it attempted to cut costs by cutting staff and reducing supply of some underperforming products.
Earnings per share in the first quarter were 70 cents, beating expectations of 52 cents, according to analyst data compiled by LSEG.
Nike announced in September that Elliott Hill, a 32-year veteran of Nike before retiring in 2020, will become its new CEO on October 14 to restore sales growth and regain market share.
With Mr. Hill at the helm, analysts expect Nike to start from scratch and rebuild its wholesale partnerships, which had shrunk under outgoing CEO John Donahoe.
Donahoe instead focused on boosting sales through its own stores and website, while U.S. retailers such as Foot Locker and Dick's Sporting Goods are using the shelf space vacated by Nike to sell fashion brands such as On, Hoka, and New Balance. quickly filled by competitors.
Nike announced Tuesday that it is postponing its investor day scheduled for November 19th.
“I’m pretty disappointed with the sales numbers here…This is not a great report by any stretch of the imagination from a quantitative standpoint, but it’s also not a great report from a qualitative standpoint with the cancellation of the Investor Day. '' said Dave Wagner, Head of Equities. Aptas Capital Advisors is an investor in Nike.
