Nike announced that it is withdrawing its full-year revenue guidance and postponing its investor day, originally scheduled for November, as it prepares for a leadership change with Elliott Hill stepping in as CEO on October 14.
This decision on Tuesday comes as the company grapples with a decline in sales and seeks to recalibrate its strategies.
In its latest earnings report, Nike exceeded earnings expectations, posting a profit of 70 cents per share, 18 cents higher than analysts’ predictions. However, the sneaker giant reported revenue of $11.59 billion, falling short of the expected $11.65 billion and marking a 10% decline from the previous year’s $12.94 billion. The company’s net income dropped to $1.05 billion from $1.45 billion a year earlier.
Nike’s Chief Financial Officer, Matthew Friend, noted that the withdrawal of full-year guidance allows Hill to reassess current strategies, reconnect with employees, and position the company for fiscal year 2026 and beyond. Previously, Nike had projected a mid-single-digit percentage decline in annual revenue, but ongoing challenges have led to this new approach of providing only quarterly guidance for the rest of the fiscal year.
During the earnings call, Friend highlighted the company’s efforts to address its product assortment and innovation strategies as part of a plan to improve sales. While he mentioned some signs of revenue improvement in the second half of the fiscal year, he cautioned that gross margins are expected to decline compared to the previous year. For the current quarter, Nike anticipates a revenue drop between 8% and 10%, a forecast more pessimistic than Wall Street’s expectations.
The decision to postpone the investor day has raised concerns among analysts, as it signals uncertainty amid an already challenging period for the company. Nike’s shares fell approximately 5% in after-hours trading following the announcement.
Critics have pointed to Nike’s focus on direct-to-consumer sales and its reliance on legacy products, such as Air Force 1s and Dunks, as factors that have hindered its innovation and market share. In contrast, competition from newer brands like On and Hoka has intensified in the US and European markets. Additionally, a slowdown in consumer spending, especially in discretionary goods, has compounded these issues.
Nike has acknowledged that its direct sales segment saw a 13% decrease, while wholesale revenue dropped by 8%. The company is also facing headwinds in China, where a “softer outlook” has affected sales performance. Despite a slight increase in revenue in that region, analysts noted that overall traffic remains weak.
As Nike looks ahead, Elliott Hill’s extensive experience with the company, including a previous tenure before retiring in 2020, is viewed as a potential advantage in rebuilding relationships with wholesale partners and addressing the competitive landscape.
CNBC, Yahoo Finance, Market Watch, and New York Post contributed to this report.
