(Bloomberg) -- Nike Inc. Chief Executive Officer Elliott Hill is about to face his first earnings call since accepting the top job in September, and Wall Street has plenty of questions.
What is the world’s largest athletic-wear company doing to repair damaged retail partnerships? How is Hill moving to unify his demoralized staff and streamline production? And, most importantly, what is Nike doing to make its brands cool again?
Hill’s answers will be vital to Nike’s future. The company is seeing more competition from sneaker upstarts, like On Holding AG and Deckers Outdoor Corp.’s Hoka label, even as demand fades for its once top-performing product lines such as Air Force 1s, Air Jordan 1s and Dunks. This year, Nike shares are down 29%.
Nike’s analysts aren’t expecting immediate improvements, since they foresee a third straight quarter of falling revenue when the company reports earnings Thursday afternoon. But investors want to hear a detailed turnaround plan.
“Hill has a long to-do list to get Nike running on all cylinders,” Jessica Ramírez, a senior research analyst at Jane Hali & Associates, said in a note to clients. The company “will face tough competition from a robust and highly competitive sports industry.”
So far, Hill has only given hints about the direction he wants to take. In his first week, he spoke to employees at headquarters in Beaverton, Oregon, and acknowledged challenges the company faces.
“Yes, we’re in a tough moment right now,” Hill said in a company interview. “We’ve been there before. And I can tell you that we will do what we’ve done before to win: Get back to a sharp focus on the consumer.”
First Steps
When Hill was hired, Nike’s first order of business was to wipe the slate clean for him. In October, the company withdrew its full-year guidance and postponed its investor day to give the new CEO more time to develop his strategy.
The executive shuffle began soon after Hill stepped on campus. He named new leaders for Nike’s legal and sports marketing departments, and rearranged the reporting structure for his supply chain team. He picked a new top diversity, equity and inclusion officer. Hill then replaced retiring human resources chief Monique Matheson with company veteran Treasure Heinle.
“We’ll continue to put our own team at the center as we prioritize creating a winning team culture,” Hill said in a memo to employees who’d survived a tough year of layoffs.
Hill has also adjusted Nike’s priorities. In December, Nike announced plans to shut down its virtual sneaker division RTFKT, which it acquired for an undisclosed sum in 2021 during the metaverse craze.
A Nike spokesperson declined to comment.
The Lifer
Hill has built his whole career around the Swoosh, unlike former Nike CEO John Donahoe, a former leader at Bain and eBay. Hill started at Nike as a sales intern in 1988 and worked his way up over three decades until he retired as the president of consumer and marketplace in 2020, shortly after Donahoe took the helm.
In September, when it was announced that Hill would come back to run Nike, some employees popped open bottles of prosecco to celebrate the return of someone with a deep knowledge of the company and strong relationships with founder Phil Knight and superstar endorser Michael Jordan.
In recent months, Nike has moved to repair retail relationships damaged under Donahoe, who curtailed outside tie-ups as he tried to shift business to Nike’s own stores and online shop. Earlier this month, Foot Locker Inc. announced that it would expand its Home Court basketball sections developed in partnership with Nike to stores worldwide.
Nike also signed two major sports deals that provide long-term stability. Hill extended Nike’s deal with the National Basketball Association and the Women’s National Basketball Association by 12 years, then came to terms with the National Football League to continue its partnership on player uniforms for all 32 teams.
Brand Revival
Nike is losing popularity among teen shoppers, and brands like New Balance, Adidas, and Birkenstock are luring consumers away from the longtime industry leader, according to Piper Sandler’s October 2024 survey of teen shoppers.
In response, Nike has shifted spending away from larger TV and print campaigns toward web ads that prioritize sending shoppers to its online shop. In an interview posted on Nike’s website, Hill said the development of ad campaigns like “Just Do It” is the Nike standard.
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