The world’s biggest sportswear maker sees a rocky road ahead.
Nike (NKE) is forecasting a steeper drop in its revenue for the current quarter than analysts expected – leading shares to drop 5% in after-hours trade on Thursday.
Earlier in the day, Nike posted results from December to February – its fiscal third quarter.
They beat expectations thanks in part to a promising consumer response to new shoe launches.
Shares rose immediately following that.
But later they reversed course — after Nike CFO Matthew Friend said he predicts a steeper-than expected drop this quarter.
Analysts had predicted a 12% tumble, but he foresaw something close to the mid-teens.
New CEO Elliott Hill fast-tracked new shoes that have performed well enough to give Nike some breathing room after several quarters of weak demand.
He’s been leading a turnaround since he took over in October, trying to take on trendy rivals like Hoka and On.
However, Friend, the CFO, said that this quarter may look bleak, as the company discounts old items to clear inventory, and continues to rebuild relationships with retailers.
Those ties had suffered when the last CEO, John Donahoe, shifted the company’s focus to direct-to-consumer sales.
While overall third-quarter revenues were down 9% to around $11 billion, in China that number was down 17%, which worried investors.
Demand there suffers from concerns over job and wage security and a drawn-out slump in property.
Friend stressed the need to focus on China on the earnings call.
CEO Hill also outlined what he called Nike’s “Win Now” strategy.
The five-pillared plan includes building out a broad swath of new shoe products and boosting its ground game in five key cities: Los Angeles, New York and London – and two of China’s biggest cities, Beijing and Shanghai.
Source: https://finance.yahoo.com/video/nike-forsees-steeper-sales-drop-052759437.html
