In This Article:
By Nicholas P. Brown and Ananya Mariam Rajesh
NEW YORK (Reuters) - Two months into his tenure as Nike CEO, Elliott Hill gets his first shot on Thursday to convince investors he can rescue the flailing sportswear company after a year stained by layoffs and cratering sales.
Platitudes from Hill will not be enough, analysts say, when Nike reports quarterly earnings. To satisfy markets, Hill needs to lay out a plan to boost innovation, repair relationships with retailers and steady sales at a brand weathering the loss of market share to nimbler competitors such as Deckers' Hoka and On.
"He's really under the microscope because he's given himself so much time to come up with a structure and a game plan," said Jay Woods, chief global strategist at investment banking firm Freedom Capital Markets, referring to Nike's decision to postpone its November investor day as Hill settled into his role.
Nike did not immediately respond to a request for comment.
Analysts say they understand a turnaround will take a few quarters. Nike's replacement of numbers-driven CEO John Donahoe in October with company veteran Hill — who started at Nike as an intern in 1988 - suggests the board wants holistic change. "I don't think there will be a short leash," said Morningstar analyst David Swartz.
Still, the pressure is on for a company that has lost 2% of its U.S. market share since the start of 2024, and 6.2% in Europe, according to Consumer Edge, a company that tracks credit and debit transaction data.
Second-quarter revenue is expected to fall 9.4% to $12.13 billion, according to data compiled by LSEG. Nike's profit per share is expected at 63 cents, compared to $1.03 a year ago.
SHOPPERS COOL TO BRAND
Consumers' intention to buy Nike products is lower than it was a year ago, according to data from HundredX, a company that uses surveys to gauge public sentiment about brands and retailers. The decline is sharpest among young consumers, a key demographic.
Early holiday shoppers were not Nike's saviors. Foot Locker, which last year purchased 65% of its athletic merchandise from Nike, lowered its annual sales forecast this month, blaming soft demand for Nike shoes in the quarter ending Nov. 2.
Overall Nike sales at retailers such as Foot Locker, Walmart, Target and Dick's Sporting Goods were down 7% from a year ago for the quarter ending Nov. 30, according to data from Yipit, which tracks sales receipts.
Online sales edged up 1% year over year in the 15 days ending Cyber Monday, lagging inflation, according to credit-card swipe tracker Facteus. Sales at Nike stores fell 7% in the same period, Facteus said.