Nike sinks 8% after pulling annual forecast amid low sales ahead of new CEO’s arrival, stock down 18% YTD | Stock Market News

Nike shares tumbled nearly eight per cent after the athletic giant withdrew its forecast for full-year financial results and postponed its investors’ day conference ahead of the arrival of its new chief executive officer (CEO) Elliott Hill. Nike reported stronger profit for the latest quarter than analysts expected, but revenue fell short of forecasts. 

The sportswear giant struggles with shoppers’ sluggish demand for new sneaker models and other products. The lacklustre results came after Nike announced in September that John Donahoe would step down as CEO on October 13. Nike veteran Elliott Hill is coming out of retirement to head up the company.

Also Read: Nike needs time to get off the sidelines

Nike shares fell as much as 7.9 per cent in New York trading on Wednesday, October 2, the most intraday since Nike last reported results in late June. The stock has dropped 18 per cent this year through Tuesday’s close, compared with a 20 per cent gain for the S&P 500 index.

Nike’s financial metrics

On Tuesday, the sportswear company pulled away its full-year sales guidance, citing the leadership transition later this month. Nike postponed its investor day, scheduled for November 19, giving Hill more time to develop his turnaround strategy.

Nike posted net income of $1.05 billion, or 70 cents per share, in the quarter that ended August 31. That compares with $1.45 billion, or 94 cents per share, in the year-ago period. In the fiscal first quarter, sales fell 10 per cent to $11.59 billion, just short of the average analyst estimate. 

Also Read: Nike withdraws annual forecast, signals weak holiday season

Declines were especially sharp in North America, Europe, Africa, and the Middle East, while problems persisted at the Converse brand. Nike expects revenue to fall 8-10 per cent in the second quarter before trends improve later this year.

Pressures are easing in some areas: Sales in Greater China outpaced analyst expectations, and the four per cent drop was the smallest among the company’s regions. Nike said new products, including the Pegasus 41 running shoe and classic franchises like Jordan, are selling well in China.

Nike banks on new CEO

Withdrawing the forecast “provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends and develop our plans to best position the business,” Nike executive vice president and Chief Financial Officer (CFO) Matt Friend told analysts.

Also Read: Nike withdraws guidance ahead of new CEO taking over

Nike CFO told analysts that, given its CEO transition and three quarters left in the fiscal year, Nike has withdrawn its full-year financial performance guidance and intends to provide a quarterly outlook for the balance of the fiscal year.

Investors want Hill to rebuild Nike’s frayed relationships with retailers while retaining and inspiring staff who’ve lost faith in the company’s trajectory. Crucially, he will also need to accelerate the development of new products.

Hill, a Nike veteran who started as an intern decades ago, replaces John Donahoe, who became CEO in 2020 when sales were soaring but oversaw Nike during one of the most tumultuous years in the company’s half-century history.

Donahoe had sought to boost sales in Nike stores and on its website by significantly paring the number of sneakers the company shipped to retail partners. However, demand for its lifestyle sneakers slumped last year while upstart brands such as On, Hoka, and Salomon quickly filled the shelf space in stores that Nike had vacated.

Also Read: Nike just did it: It replaced its CEO in the nick of time

Meanwhile, product development had slowed at Nike headquarters in Beaverton, Oregon, as the company dealt with pandemic crises and leaned on its existing lifestyle shoes. Executives said they are resetting the product pipeline with a three-year blitz that started ahead of the Olympic Games in Paris this year.

Nike growth outlook

Nike spent aggressively around the Olympics to revive sales via bolder advertising for a global audience. The company said “demand creation” expenses rose 15 per cent to $1.2 billion for the quarter.

Nike struggles to manage three major footwear franchises that catapulted the company to $50 billion in sales and then abruptly stalled. Sales of Nike Dunks, Air Force 1s, and Jordan 1s—its top lifestyle lines meant to be worn on the street—dropped in the double digits last quarter, and the category is expected to decline through the year.

Also Read: Nike suspends online sales in Turkey after customs tax increase

Friend said the company is intentionally reducing the proportion of its business from those lines to “create better balance” while renewing its focus on performance sneakers and apparel. He called out soccer, fitness, and running as growth areas. Nike has been particularly criticized for failing to prioritize runners, one of its key markets.

Nike executives have hosted their retail partners and shown them products set for release in the second half of 2025 to regain their confidence. Nike is also investing in its partners’ shops, developing new areas within Foot Locker and Dick’s Sporting Goods stores.

With inputs from AP, Bloomberg