Nike's shares plummeted on Friday. Investors were wary of new CEO Elliott Hill's turnaround plan after the struggling sneaker giant warned that sales could plummet in double digits.
On Thursday, the company reported a 9% decline in sales during all Crusia holiday quarters, including a 17% slump in quarterly sales in China, predicting a sharper decline than expected in fourth quarter revenue.
Nike said sales will decline in the “10-year-old range” with revenue calls for the quarterly closing in May. Wall Street had expected sales to fall by 11.4%.
Assuming the role of helping the company regain market share losses in October, Hill laid out what it called the “Win Now” strategy, which involves increasing its ground presence in five major cities, including Shanghai and Beijing.
“The plan is there, but they haven't seen the results yet,” said Jay Woods, chief global strategist at investment banking firm Freedom Capital Capital Markets.
Nikestock fell by up to 9% after opening bell Friday. It has reached its lowest level since the pandemic. Stocks fell 5% in noon trading.
The Beaverton, Oregon-based company has lost 5% of its previous value this year, following a 30% outbreak in 2024.
“Nike is working to get back to what made it special,” writes BMO analyst Simeon Seigel in a research note. “This is obviously not for everyone because it takes longer to turn.”
Nike Honchos has deepened this year's year-long struggle to reverse revenue and rekindle growth, with Nike Honchos denounced a turnaround that has not yet turned the corner and blamed the impact of a 20% tariff on goods from China, which took effect in early March.
Nike
Almost a quarter of Nike's products are produced in China.
“We are also navigating several external factors that create uncertainty in our current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates, and tax regulations.
Over the past few years, the company has bets that it will significantly reduce the number of retailers selling sneakers, such as Discounter DSW and apparel, and sell more products in its stores and online. They also face tough competition with newcomers, Hoka and others.
The company is reviving some of these traditional retailers.
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“Nike took it too far and underestimated the importance of third-party retailers,” said Neil Saunders, an analyst at GlobalData Retail, in a note to clients in June.
Hill quickly tracked the launch of certain sneakers, such as the Pegasus Premium and the Vomero 18.
Still, Nike is trying to overcome the failures of previous management strategies, leading to a lack of innovation in its product line.
Last month, Nike announced a new female activewear brand in collaboration with Kim Kardashian-owned shapewear brand Skim to expand the company's appeal as Hill competes with new brands.
