Nike withdrew its annual revenue forecast on Tuesday and missed estimates for quarterly revenue as the sportswear giant battles weak footwear demand amid stiff competition from newer brands globally, sending its shares down 6% after hours.
It had earlier forecast a mid-single-digit percentage range decline in annual revenue.
The company is yet to see sales benefits from its drive to fast-track innovation with the launch of new product lines such as Air Max Dn and Pegasus 41 to revive demand.
Analysts also say Nike has done little to drive demand and take back market share from brands like Deckers’ Hoka and Roger Federer-backed On mainly in the United States and Europe.
The sportswear giant has been hurt by a lull in consumer spending in China, which led to a 3% drop in the Greater China region. Sales in the US and Europe fell 14% each.
The company’s first-quarter net revenue fell 10.4% to $11.59 billion. Analysts had expected a 10% fall to $11.65 billion, according to analysts’ estimates compiled by LSEG.
However, Nike reported a 120 basis points jump in gross margins to 45.4% from its attempts to cut costs through layoffs and reducing supply of some underperforming products.
First-quarter profit per share of 70 cents also beat estimates of 52 cents, according to analysts’ data compiled by LSEG.
Nike said in September company veteran Elliott Hill, who was at Nike for 32 years before retiring in 2020, will take over as new CEO on Oct. 14, tasked with bringing back sales growth and winning back market share.
With Hill at the helm, analysts expect Nike to begin from scratch and rebuild wholesale partnerships that had tapered under outgoing CEO John Donahoe.
While Donahoe focused instead on bolstering sales through the company’s own stores and website, US retailers like Foot Locker and Dicks Sporting Goods quickly filled the shelf space Nike had vacated with fashionable competitors like On, Hoka and New Balance.
Nike said on Tuesday it had postponed its investor day, earlier scheduled for Nov. 19.
“I am pretty disappointed by the revenue number here … this is not a great report whatsoever by any stretch of the imagination from a quantitative standpoint, but also from a qualitative standpoint of canceling the investor day,” said Dave Wagner, head of equities at Aptus Capital Advisors, which has a stake in Nike.
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