Investors and analysts expect Nike to lower its annual forecast Tuesday when it reports quarterly results, the company’s first earnings report since announcing a new CEO earlier this month.
Elliott Hill, who spent 32 years at the sportswear giant before retiring in 2020, will once again become chief boss from October 14 to succeed John Donahoe, Nike announced on September 19.
Mr. Hill will have the daunting task of turning around a once-dominant brand that is now losing market share and has recently faced competition from smaller, nimbler rivals such as Deckers’ Hoka and Roger Federer-backed On. .
“This will be one of those quarters where the company will probably try to avoid bad news as much as possible, get it over with and start fresh,” said Jay Woods, the bank’s chief global strategist. Investing in free capital markets.
Woods said he expected investors to give Hill a “grace period” upon his arrival, but added: “The question is whether, with his experience and deep ties to the iconic brand Nike, he can bring back a little magic. »
Four brokerages had reduced their price targets for Nike before the quarter, but after the company announced Mr. Hill’s new role, five brokerages raised their price targets.
Nike’s first-quarter revenue is expected to fall 10% to $11.65 billion, its biggest decline in more than four years, and earnings per share are expected to fall, according to analyst estimates compiled by LSEG . by 44.7% to settle at 52 cents.
In June, Nike forecast a surprise drop in annual sales and some analysts expect it to revise its guidance again on Tuesday.
Analysts have since revised their forecasts and on average expect a 5% decline in annual revenue for the 2025 financial year.
“Given the issues they’ve had, I think it makes sense to lower expectations or remove the forecasts for now and give the new team an opportunity to look at the business, see what what she thinks she can solve and how long it will take. said Joseph Civello, an analyst at Truist Securities.
Nike shares have risen more than 10% since Mr. Hill was named CEO, recouping some losses after the stock had its worst day in June.
Investors will also be attentive to the fallout from the Paris Olympic Games. Nike and Puma managed to increase visits to their direct-to-consumer sites during the opening week and convert them into a good percentage of sales, research firm Similarweb reported in August.
THE INNOVATION PUZZLE
Nike had to move forward some launches after losing ground to Hoka and On, whose trendy, more comfortable shoe lines are resonating with consumers.
“If you look at any retail brand, especially on the footwear side, it seems like the new entrants are the most attractive right now,” said Dave Wagner, head of equities at Aptus Capital Advisors, which holds a stake in Nike.
“Nike had to innovate more, but today it is lagging behind.
Over the past two quarters, Nike has unveiled new running and performance shoes, such as Air Max Dn and Pegasus 41, and announced plans to launch a new line of athletic shoes priced $100 and under , in order to attract budget-conscious consumers. But these initiatives have not yet yielded major results.
In the meantime, the company has also relaunched some shoes with minor changes, especially in color. According to Jessica Ramirez, principal analyst at Jane Hali & Associates, that’s not enough.
“I don’t think the second half will be good for Nike…until we see new products in the product line for 2025,” Ramirez said.
