Nike‘s stock got a welcome lift on Thursday after it reported earnings results led by its new chief executive officer Elliott Hill.
The sportswear giant reported top and bottom line results for the quarter that beat the expectations of analysts. Hill, who replaced John Donahoe as CEO in October, said in a statement that his top priority is to “return sport to the center of everything we do.”
“We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value,” Hill said. “Our team is ready to go, and I’m confident you will see more moments of Nike being Nike again.”
Shares of Nike were up more than 10 percent in the initial moments in after hours trading on Thursday.
For the second quarter, Nike reported that revenues were down 8 percent to $12.4 billion over the same quarter last year, ahead of the $12.11 billion expected by analysts surveyed by Yahoo Finance. Net income was down 26 percent to $1.2 billion and diluted earnings per share was 78 cents, which represented a 24 percent decline. This was ahead of the 63 cents expected by analysts.
Nike chief financial officer Matthew Friend said in a statement that Nike’s Q2 results “largely met” expectations as the company continues to realign demand for its key products. Nike recently implemented a promotional strategy to manage higher levels of inventory that have accumulated as a result of slower than expected retail sales. Nike has also reduced the presence of its popular franchises, such as the Air Force 1, Air Jordan 1 and Dunk, to reset demand for these key franchises.
“Under Elliott’s leadership, we are accelerating our pace and reigniting brand momentum through sport,” Friend said.
By brand, Nike brand revenues were down 7 percent to $12 billion in Q2, driven by declines across all geographies. Converse brand sales declined 17 percent to $429 million. By channel, Nike direct revenues were down 13 percent to $5 billion. Wholesale was down 3 percent to $6.9 billion. Inventories were flat compared to the prior year.
Given the CEO shift, Nike withdrew its guidance for the year last quarter and said will provide quarterly guidance throughout 2025.
Hill’s turnaround hinges on several key elements including a reinvigorated innovation pipeline, an improved company culture and, perhaps most notably, a new wholesale strategy. After exiting several retail partners in 2021, Nike has started to lean back into these relationships and recently elevated Tom Peddie to the role of vice president, general manager of North America to oversee this business unit
