Nike's shares experienced an approximately 8% decline in premarket trading on Wednesday, following the sportswear giant's decision to withdraw its annual revenue target. This move has left investors uncertain about the timeline for a recovery under the incoming CEO, Elliott Hill. Additionally, the company canceled its planned investor day on November 19th. CFO Matthew Friend explained that removing the revenue outlook would provide Hill with "much-needed flexibility to assess Nike's strategies and business trends."
Jessica Ramirez, a senior analyst at Jane Hali & Associates, commented, "The speed of a turnaround remains unclear... At this stage, there's nothing concrete to suggest a definite timeline or early indicators of what lies ahead."
In September, Nike appointed veteran executive Hill as CEO, replacing John Donahoe, as demand waned and competitors like On Holding and Hoka increased their market share, particularly in high-performance and innovative running shoes. Shares of rival companies Under Armour and Lululemon fell by 2.3% and 1.6%, respectively, while Foot Locker's stock dropped over 2% in premarket trading. Nike's forward price-to-earnings ratio for the next 12 months stood at 27.98, compared to 27.08 for Deckers and 35.14 for Adidas.
Hill is scheduled to assume his role on October 14th, and investors had hoped for clarity on Nike's strategy during the analyst day, which was canceled. Nike has not yet announced a new date for the event. Jay Woods, chief global strategist at Freedom Capital Markets, remarked, "As we approach the year-end, Nike will leave investors with more questions than answers, and we haven't received any clear answers."
Nike revealed on Tuesday that it had to increase promotions to boost sales during the quarter and indicated a weaker holiday season. Bernstein Societe Generale analysts noted in a report, "Nike is currently in the depths of its turnaround. Early signs of market traction are positive, but they haven't yet translated into concrete numbers, as markdowns continue to affect sales and margins."
