Nike share price tumbled by 6% in after-market trading as it withdrew annual revenue forecast on Tuesday. The pull out of the revenue forecast came just as a new CEO is set to take the helm at the sportswear giant. Also Nike is staring at a holiday season likely to be filled with discounts and weak traffic on its website and mobile apps.
The Nike stock had fluctuated earlier too after the company posted disappointing quarterly sales growth but beat Wall Street estimates on profit.
Nike sales decline
Nike postponed an investor day scheduled for November 19. Traffic decline across Nike-owned stores and websites were more pronounced than anticipated, leading to an inventory backlog, Nike CFO Matthew Friend said on a post-earnings call that was not attended by outgoing CEO John Donahoe.
Friend also said that sales declined despite higher promotions at stores owned by its wholesale and retail partners.
Competition for Nike
The company’s growth has stalled recently, squeezed by nimbler, on-trend rivals such as On and Deckers’ Hoka. Last month, the company said it was bringing back company veteran Elliott Hill to right the ship, succeed Donahoe as CEO.
Nike revenue forecast withdrawn
Withdrawing the revenue forecast would give Hill the much-needed flexibility to evaluate Nike’s strategies and business trends. He will be able to “develop plans to best position the business for fiscal 2026 and beyond,” Friend said. Nike had earlier forecast an annual revenue decline in the mid-single digits.
In lieu of an annual guidance, Nike offered outlook for its September-November quarter, forecasting a drop in sales between 8% and 10%. This drop in sales was steeper than the 7% that analysts had predicted, according to estimates compiled by LSEG. It expects gross margins to fall about 150 basis points in that period.
“We expect that the return to strong growth will take time,” Friend said, “but we believe we have all the right building blocks, especially with Elliott now leading us.”
Nike’s plan for wholesale partnerships
Hill will be tasked with rebuilding Nike’s wholesale partnerships that had tapered under Donahoe, who focused instead on bolstering sales through the company’s own stores and websites. The strategy had led U.S. retailers such as Foot Locker and Dick’s Sporting Goods to quickly fill Nike’s vacated shelf space with fashionable competitors.
Nike’s revenue
Nike’s overall net revenue in the first quarter declined 10.4% to $11.59 billion, slightly worse than the 10% fall estimated by analysts.
Analysts say the company is yet to see benefits from its drive to fast-track innovation and revive demand through new product launches like Air Max Dn and Pegasus 41.
“I am pretty disappointed by the revenue number here,” said Dave Wagner, head of equities at Aptus Capital Advisors, which has a stake in Nike. “This is not a great report … from a quantitative standpoint, but also from a qualitative standpoint of canceling the investor day.”
Nike stock update
Nike’s stock has fallen 18% so far this year. It has recouped 10% since September 19, when the company announced Hill’s appointment.
Today Nike stock fell by 3% despite publishing first quarter EPS that topped consensus, as revenue trailed estimates. Management said its comeback will take time, but they are seeing early wins.
