Nike’s sales and profits took a hit in its fiscal first quarter as the popular sportswear brand struggled with low demand for new sneaker models and other products. The disappointing results were announced on Tuesday, coinciding with the news that CEO John Donahoe will step down on October 13. Elliott Hill, a longtime Nike employee, will take over the role.
Due to the leadership change, Nike has withdrawn its sales forecast for the year and postponed its investor day, originally set for November. This gives Hill more time to plan a turnaround for the company.
In the first quarter, sales dropped 10% to $11.59 billion, falling just short of what analysts had expected. The biggest declines were seen in North America and Europe, Africa, and the Middle East, with ongoing struggles at Nike’s Converse brand.
Looking ahead, Nike predicts revenue will fall by 8% to 10% in the second quarter before starting to improve later this year.
As a result, Nike’s shares fell nearly 8% in New York trading on Wednesday, marking their steepest drop since late June. The stock has now decreased 18% this year, in contrast to a 20% gain for the S&P 500 Index. Analysts at Jefferies warned that share prices may continue to drop even after Hill takes over.
However, there were some positive signs: sales in Greater China did better than expected, with only a 4% decline, which was the smallest among Nike’s regions. New products, such as the Pegasus 41 running shoe and popular Jordan styles, are selling well in China.
Additionally, Nike’s gross margins improved due to lower costs for products, warehousing, and logistics, and earnings per share for the quarter that ended on August 31 exceeded expectations.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
