Nike on Tuesday withdrew its annual revenue forecast as a new chief executive is set to take the helm of the sportswear giant, which faces a holiday season likely to be filled with sales and weak website and online traffic. mobile applications.
The news sent shares of Nike (NYSE:NKE) tumbling 6% in after-hours trading. They were earlier shaken after the company reported disappointing quarterly sales growth but beat Wall Street estimates for earnings.
Nike also postponed an investor day scheduled for Nov. 19.
The decline in traffic at Nike-owned stores and websites was sharper than expected, leading to a backlog, Nike Chief Financial Officer Matthew Fred said in a call after the earnings call, which was not attended by the outgoing managing director John Donahoe.
Friend also said sales were down despite higher offers at stores owned by wholesale and retail partners.
The company’s growth has stalled recently as it gets squeezed by more versatile, on-trend competitors like Deckers’ On and Hoka. Last month, the company announced it was bringing back corporate veteran Elliott Hill to right the ship, succeeding Donahoe as CEO.
Nike stock is down 18% so far this year. It has recovered 10% since Sept. 19, when the company announced Hill’s appointment.
The withdrawal of the outlook will give Hill the necessary flexibility to evaluate Nike’s strategies and business trends and “develop plans to best position the business for fiscal 2026 and beyond,” Friend said. Nike had earlier forecast a mid-single-digit decline in annual revenue.
Instead of annual guidance, Nike offered an outlook for the September-November quarter, forecasting a sales decline of between 8% and 10%, steeper than the 7% analysts had predicted, according to estimates compiled by LSEG. It expects gross margins to decline by about 150 basis points in that period.
“We expect a return to strong growth will take time,” said Friend, “but we believe we have all the right building blocks in place, especially with Elliott now leading the way.”
Hill will be tasked with rebuilding Nike’s wholesale partnerships, which had declined under Donahoe, who focused on boosting sales through the company’s stores and websites. That strategy had led U.S. retailers such as Foot Locker (NYSE:FL) and Dick’s Sporting Goods (NYSE:DKS) to quickly fill Nike’s empty shelf space with trendy competitors.
Hill was Nike’s general manager for North America during a difficult period in 2010, Friend said, when the company returned to growth by “redefining the market around athletics.” A similar treatment is needed now, he added.
“When we say things like ‘we need to sharpen our focus on sports,’ it doesn’t just mean we need to sell more performance products,” he said. “What that means is that we need to create deeper connections with consumers through sports.”
Nike’s total net income in the first quarter fell 10.4 percent to $11.59 billion, slightly worse than the 10 percent decline analysts had estimated.
Analysts say the company has yet to see the benefits of its effort to accelerate innovation and revive demand through the launch of new products such as the Air Max Dn and Pegasus 41.
At Bro In Finance, we are committed to helping traders navigate the complexities of the forex market. Our in-depth analysis, expert insights, and advanced tools empower you to make informed decisions and achieve your trading goals. Whether youโre a beginner or an experienced trader, Bro In Finance is your trusted partner in mastering the forex market. Visit our website for more trading tips and strategies to enhance your trading experience.
Check out our on Best Forex Brokers to know more about this topic
Check out the most crucial steps that you need to take when choosing your forex broker
Have you heard about an amazing Broker Platform called โAVATRADEโ? We at Bro In Finance do recommend this amazing broker.
Check out here to figure out the best funded trader program: Which Funded Challenge is Best
Reference;
Reuters (2024)ย Nike withdraws annual forecast, signals weak holiday season By Reuters,ย Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/nike-posts-biggerthanexpected-quarterly-sales-drop-3643825 (Accessed: 2 October 2024).