Nike Inc.’s new Chief Executive Officer Elliott Hill pledged to reignite growth in his first earnings call by refocusing on sports and mending ties with retail partners.
Hill, who came out of retirement to step into the company’s top job in October, said the company will get “more aggressive” with its sports-related marketing while eliminating discounts for online sales. Orders are expected to fall in the summer due to a shift in inventory, and the company is anticipating some short-term liquidation of excess inventory as it tries to clear space to introduce new products for next fall and holiday season.
“I recognize that some of these actions will have a negative impact on our near-term results, but we’re taking the long-term view here,” Hill said on the call.
Chief Financial Officer Matt Friend said that revenue in the company’s current quarter is expected to decline in the low double digits — which would represent a steeper drop than the 7.7% decline posted in the previous period.
The shares were little changed at 5:44 p.m. in extended New York trading, erasing an earlier gain of as much as 12%. The stock has declined 29% this year through Thursday’s close.
Nike is at a critical juncture as management tries to remedy waning demand for its lifestyle shoe lines, such as the Air Force 1, and a lack of new products and designs. Prior to the call, the company reported revenue, profit and gross margin that surpassed analyst estimates in the quarter ended Nov. 30.
The report suggests that performance is stabilizing at the world’s largest athletic-wear company. Nike is trying to reverse a sales slump tied to waning demand for its lifestyle shoe lines, such as the Air Force 1, and a lack of new products and designs. All regions except for China performed better than expected.
Investors have been hungry for details from Hill, who shuffled senior management and shifted some of the company’s priorities in his early days. That included naming new leaders in the human resources, legal and sports marketing departments and shutting down a digital sneaker division.
In a research note, Bloomberg Intelligence analyst Poonam Goyal said that “better-than-expected wholesale and apparel revenue were the standouts, with each besting consensus by a wide margin.”
Hill said he has met with league commissioners in professional football, basketball and soccer. The company is also moving to freshen up its products.
(Updates share trading and adds details from the statement and analyst quote.)