(Automated translation by Reuters, please see disclaimer
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Nike withdraws its annual revenue forecast
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The company expects an 8% to 10% drop in revenue in the second quarter
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Nike reports first-quarter earnings per share of 70 cents, compared to estimates of 52 cents
(Rewritten to add details of the conference call and context) by Ananya Mariam Rajesh and Nicholas P. Brown
Nike NKE.N withdrew its annual revenue forecast on Tuesday, as a new chief executive is set to take the reins of the sportswear giant, which faces a busy holiday season. year probably marked by discounts and low traffic on its website and mobile applications.
The news sent Nike shares down 6% in after-hours trading. They had fluctuated earlier after the company posted disappointing quarterly sales growth while beating Wall Street profit estimates.
Nike also postponed an investor day scheduled for November 19.
The decline in traffic at Nike-owned stores and websites was more pronounced than expected, leading to a buildup of inventory, Matthew Friend, Nike’s chief financial officer, said in a subsequent conference call. publication of the results and in which John Donahoe, outgoing managing director of the company, did not participate.
Mr Friend also said sales had fallen despite greater promotions in stores owned by its wholesale and retail partners.
The company’s growth has stalled recently, crushed by more nimble, trend-driven rivals such as Deckers’ On ONON.N and Hoka DECK.N. Last month, the company announced the return of company veteran Elliott Hill to turn around the company and succeed Donahoe as chief executive officer.
Nike stock has fallen 18% since the start of the year. It has regained 10% since September 19, when the company announced the appointment of Elliott Hill.
Withdrawing the outlook would give Mr. Hill the flexibility to evaluate Nike’s business strategies and trends and “develop plans to best position the company for fiscal 2026 and beyond,” Mr. Friend said . Nike had previously forecast an annual drop in revenue of around 10%.
Instead of an annual guidance, Nike offered an outlook for its September-November quarter, projecting a sales decline between 8% and 10%, steeper than the 7% expected by analysts, according to estimates compiled by LSEG . The company expects gross margins to decline by approximately 150 basis points during this period.
“We expect it will take time to return to strong growth,” Mr. Friend said, “but we believe we have all the elements necessary, particularly with Elliott now leading us.”
Mr. Hill will be charged with rebuilding Nike’s partnerships with wholesalers, which had declined under Donahoe, who instead focused on strengthening sales in the company’s stores and websites. This strategy led American retailers such as Foot Locker and Dick’s Sporting Goods to quickly fill the shelf space vacated by Nike with fashionable competitors.
Mr. Hill was Nike’s chief executive of North America during a difficult period in 2010, Mr. Friend said, when the company returned to growth by “reprofiling the market around sports.” a similar approach today, he added.
“When we say we need to focus more on sports, that doesn’t just mean we need to sell more performance products,” he said. “This means we need to create deeper connections with consumers through sport
Nike’s overall first-quarter net revenue fell 10.4% to $11.59 billion, slightly lower than the 10% decline estimated by analysts.
Analysts say the company has yet to reap the rewards of its efforts to accelerate innovation and revive demand through the launch of new products such as the Air Max Dn and Pegasus 41.
“I’m pretty disappointed with the revenue,” said Dave Wagner, head of equities at Aptus Capital Advisors, which owns a stake in Nike. “It’s not a good report… from a quantitative point of view, but also from a qualitative point of view, with the cancellation of the investor day
