Nike’s shares plummeted Friday as investors grew wary about new CEO Elliott Hill’s turnaround plans after the struggling sneaker giant warned that sales could plunge by double digits.
On Thursday, the company reported a 9% sales decline during the all-crucial holiday season quarter,— including a 17% slump in quarterly sales in China — and forecast a steeper-than-expected drop in fourth-quarter revenue.
Nike said sales will be down in the “mid-teens range” for the quarter that ends in May in an earnings call. Wall Street had expected sales to be down by 11.4%.
Hill — who took on the role in October to help the company regain lost market share — has laid out what he called a “Win Now” strategy, which includes boosting on-the-ground presence in five key cities such as Shanghai and Beijing.
“The plan is there, (but) they are just not seeing results yet,” said Jay Woods, chief global strategist at investment banking firm Freedom Capital Markets.
Nike stock fell as much as 9% after Friday’s opening bell — hitting its lowest level since the pandemic. Shares were down 5% in midday trading.
The Beaverton, Ore.-based company has lost 5% of its value so far this year — following a 30% plunge in 2024.
“Nike is working to return to what made it special,” wrote BMO analyst Simeon Seigel in a research note. “This is clearly not for everyone as turns take time.”
The company’s year-long struggle to reverse sliding revenues and reignite growth are deepening this year, with Nike honchos blaming weak consumer demand, a turnaround that hasn’t turned the corner yet and the impact of a 20% tariff on goods from China that went into effect at the start of March.
Nearly one quarter of Nike’s merchandise is produced in China.
“We are also navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates and tax regulations, as well as the impact of this uncertainty and other macro factors on consumer confidence,” chief Financial Officer Matt Friend said on an earnings call with analysts on Thursday.
Over the past several years, the company slashed the number of retailers selling its sneakers, including discounter DSW, and apparel, betting that it could sell more products in its own stores and online. It’s also facing stiff competition from newcomers, Hoka and On.
The company is bringing back some of those traditional retailers.
“Nike took it too far and underestimated the importance of third-party retailers,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients in June.
Hill has fast-tracked certain sneaker launches such as Pegasus Premium and Vomero 18 that helped the company post a smaller-than-expected drop in quarterly revenue and profit.
Still, Nike is looking to move past the previous management’s strategy missteps that led to a lack of innovation for its product lines.
Last month, Nike announced a new women’s activewear brand in partnership with Kim Kardashian-owned shapewear brand Skims, as Hill expands the company’s appeal to compete with newer brands.
