CEO Elliott Hill is attempting to guide the company back to growth after a difficult year of falling sales and corporate layoffs
[NEW YORK] Nike’s results surpassed analysts’ expectations as its new chief executive officer’s turnaround strategy begins to take hold.
Revenue fell 9 per cent to US$11.3 billion for the quarter ended Feb 28. That’s better than the 11 per cent drop that Wall Street predicted.
Nike shares rose 4 per cent at 4.26 pm in after-hours trading in New York. The stock is down 5 per cent this year to Thursday’s (Mar 20) close, a slightly steeper drop than the S&P 500 Index.
CEO Elliott Hill, a longtime Nike executive who came out of retirement to take the role in October, is attempting to guide the company back to growth after a difficult year of falling sales and corporate layoffs. He’s reshaping Nike by refocusing on sports and mending relationships with its retail partners.
Nike is in the midst of clearing out stale inventory through heavy discounting, a consequence of fading demand for some of its biggest sneaker franchises, including Air Force 1s and Dunks. Inventory fell 2 per cent in the period.
Nike is trying to stage its comeback against a backdrop of weak consumer spending and fallout from US President Donald Trump’s escalating trade war. China also remained a weak spot, with sales missing analyst expectations amid a prolonged consumer slump in the market. But performance in North America and the region that includes Europe, Africa and the Middle East came in better than expected.
In December, Hill outlined a plan to invigorate Nike by reorganising around departments that focus on sports such as running, basketball and soccer. The company is also reallocating marketing funds from clicky digital ads to more anthemic sports campaigns. It spent 8 per cent more on marketing in the latest quarter, according to the statement.
In February, the brand announced a new line called NikeSkims, a partnership with Kim Kardashian’s underwear brand. Nike also aired its first Super Bowl commercial in nearly three decades.
Hill has reshuffled his senior management ranks as well, naming new heads of several departments including human resources, legal and sports marketing. Nike’s top strategy and communications executives are exiting the company, the company said in a memo this week. BLOOMBERG
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