Sportswear giant Nike has postponed an investor day scheduled for November and withdrawn its financial guidance, as it waits for its new chief executive officer (CEO) Elliott Hill to take over on 14 October. Hill is replacing John Donahoe, who has been the CEO since January 2020.
Elliott Hill had previously been at Nike for 32 years and then retired, before now agreeing to come back as CEO of the company. The American sportswear giant has recently been facing falling sales and intense competition from emerging rivals.
The move is expected to allow Hill enough time to adjust to his new position, examine the current business trends and strategies, strengthen bonds with employees and work on plans for the next year.
Nike has also said that it would be sharing quarterly guidance for the rest of this year.
The company has been facing a turbulent few months, having lost significant market share to smaller rivals such as Hoka, On and New Balance.
That has led to a drop in revenues, in the first quarter of the financial year 2025, coming in at $11.6bn (€10.48bn), a drop of 10% from the same period last year. Nike Direct revenue for the Q1 FY2025 was $4.7bn (€4.25bn), which was also a plunge of 13% from the same quarter last year.
Similarly, diluted earnings per share also plummeted 26% in the first quarter of the financial year 2025, at $0.70 (€0.63).
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Matthew Friend, executive vice president and chief financial officer (CFO) of NIke, said in the earnings report: "Nike's first quarter results largely met our expectations. A comeback at this scale takes time, but we see early wins - from momentum in key sports to accelerating our pace of newness and innovation. Our teams are energised as Elliott Hill returns to lead Nike's next stage of growth."
Now, Hill has been brought in to claw back market share and revamp sales.
Dan Coatsworth, investment analyst at AJ Bell, said in an email note: "A strategy to sell more products direct to the consumer isn't living up to expectations. Nike wanted to bypass the middleman for part of its sales, not only to engage more with its customer base and learn about their preferences but also to make bigger profit margins.
"While it is not unique in doing so, it will be interesting to see if there is a radical change in strategy once the new CEO has reviewed the business.
"Nike has also committed the cardinal sin of overestimating how many shoes it would sell, leaving it with unsold items that have been discounted to shift stock. Discounting is the avenue of last resort as there is always a danger that consumers get used to cheaper prices and expect them forever. Weaning people off discounts is incredibly hard."
Nike battered by athleisure market woes
Nike, along with other prominent athleisure brands such as Lululemon and JD Sports, has faced significant business and revenue challenges in the last several months. This was especially evident post-pandemic, when Nike's boost in running shoes' sales tapered off, and more customers changed direction towards smaller, niche brands such as On and Hoka.
There were also rising concerns about decreasing quality and comfort, exacerbated by smaller Air bubbles and lower quality leather, especially when it came to their retro-style sneakers.
Customers hit by the cost of living crisis in several of Nike's key markets, have also been demanding better choice and higher quality for the products they do choose to splurge on, which Nike has struggled to provide.
Coatsworth further explained: "Nike is now paying the price for taking its eyes off the ball. Rivals like On and Hoka have taken market share, partially because their running shoes are now adopted as everyday footwear, but also because Nike hasn't moved with the times.
"The company has relied too much on its Air Force, Air Jordan and Dunk lines and failed to innovate elsewhere. Nike is now purposely scaling back availability of these core product lines, implying it is to make room for new ideas but, in reality, it could also be down to consumer boredom with the brands, at least for now.
"Nike says internally these brands are classified as 'iconic' and will remain a key part of its arsenal. Yet it is fully aware that consumers want the latest fashions and that means coming up with new and exciting products on a regular basis – something that Nike has failed to do, and it will now have to play catch-up."
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