(Automated translation by Reuters, please see disclaimer by Ananya Mariam Rajesh and Nicholas P. Brown
Investors and analysts expect Nike NKE.N to lower its annual forecast on Tuesday when it reports quarterly results, the company’s first earnings report since announcing a new chief executive early of the month.
Elliott Hill, who spent 32 years at the sportswear giant before retiring in 2020, will become top boss again from October 14 to succeed John Donahoe, Nike announced on September 19.
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, more nimble rivals such as Deckers’ Hoka DECK.N and On ONON.N , backed by Roger Federer.
“This is going to be one of those quarters where they’re probably going to try to shake off all the bad news as much as they can now to get it over with and start fresh,” said Jay Woods, chief global strategist at the investment bank Freedom Capital Markets.
Woods said he expected investors to give Hill a “grace period” when he joined, but added: “The question is whether he can, with his experience and his connections deep with the iconic Nike brand, bringing 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 those targets again on Tuesday.
Analysts have since revised their forecasts and on average expect the company to report a 5% decline in annual revenue for fiscal 2025.
“Analysts expect the company to lower its guidance, or remove its guidance for now, and give the incoming team a chance to review the business , to see what she thinks she can fix 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 chief executive, 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 PUMG.DE managed to increase the number of visits to their direct-to-consumer sites during the opening week and convert them into a good percentage of sales, research firm Similarweb said in august.
THE INNOVATION PUZZLE
Nike has 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 kind of the most prestigious right now,” said Dave Wagner, head of equities at Aptus Capital Advisors, which has a stake in Nike.
“Nike has had to innovate more, but it is currently 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 at $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 only 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,” Ms. Ramirez said.
