Nike's Stock Dip & Forecast Withdrawal Spark Investor Concerns
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Nike Inc. (NKE:US) has experienced a notable 6% decline in premarket trading following the company's decision to withdraw its annual revenue forecast. This move has left investors uncertain about the timeline for a potential recovery, as incoming CEO Elliott Hill prepares to take the helm of the global sportswear brand.
Additionally, Nike postponed its previously scheduled investor day, which was set for November 19. CFO Matthew Friend explained that withdrawing the outlook provides Hill with the necessary flexibility to reassess the company's strategies and review ongoing business trends.
Elliott Hill, a veteran executive at Nike, was appointed CEO last month, succeeding John Donahoe. Under Donahoe’s leadership, Nike faced increasing competition from brands such as On Holding and Hoka, particularly in the performance running shoe market, where these rivals have made significant gains.
Despite efforts to reinvigorate demand through new product launches like the Air Max DN and Pegasus 41, Nike has yet to see substantial sales growth. In the first quarter, footwear sales in the U.S. and Europe fell by 14%, while sales in Greater China saw a 3% decline. Overall net revenue dropped by 10.4% to $11.59 billion, just below analysts' expectations of $11.65 billion, as reported by LSEG.
However, Nike managed to surpass earnings expectations, with first-quarter profits reaching $0.70 per share, exceeding the forecast of $0.52 compiled by analysts.
The company attributed some of its recent sales performance to increased promotional activity, which was necessary to boost revenue during the quarter. Looking ahead, Nike has hinted that it expects further challenges in the holiday season.
On the U.S. Congressional trading front, Nike’s stock has seen mixed reactions from investors since the second half of 2024. Congresswoman Kathy Manning reduced her stake in the company, while Senator Shelley Moore Capito increased her investment. Additionally, Congressman Ro Khanna has been actively trading the stock, reflecting varied sentiments among U.S. lawmakers.
