Nike (NKE, Financial) is set to release its latest quarterly earnings today, marking the first report since the announcement of the new CEO earlier this month. Analysts from LSEG predict a 10% decline in first-quarter revenue to $11.65 billion, the largest drop in over four years, and a 44.7% decrease in earnings per share to $0.52.
On September 19, Nike announced Elliott Hill will take over as CEO from John Donahoe starting October 14. Hill, who worked at Nike for 32 years before retiring in 2020, faces the challenge of revitalizing the brand amid declining market share and competition from smaller, agile rivals like Decker's Hoka and On, supported by Roger Federer.
Jay Woods, Chief Global Strategist at Freedom Capital Markets, indicated that Nike might address all recent bad news in this quarter to start afresh. He hopes investors will grant Hill a grace period to show results. Despite four investment banks downgrading Nike's price target this quarter, five banks have raised their targets following Hill's appointment. Since his nomination, Nike's stock price has risen over 10%, recovering some losses from its worst day in June.
Investors are also keenly watching for any boost from the upcoming Paris Olympics. Research firm Similarweb noted in August that Nike and Puma saw significant increases in direct-to-consumer website traffic, translating into substantial sales.
In response to losing ground to Hoka and On, Nike has launched products like the Air Max Dn and Pegasus 41 and plans to introduce a new line of budget-friendly sports shoes under $100. However, these efforts have yet to yield significant results.
Meanwhile, Nike has re-released some shoes with minor updates like new colors. Jessica Ramirez, Senior Analyst at Jane Hali & Associates, believes these steps are insufficient and expects the brand to struggle until new products arrive in 2025.
