News
China Market · Nike · Sales Decline · Turnaround Strategy
Nike's shares plummeted Friday after the company reported a 9% sales decline in the crucial holiday season quarter, including a 17% slump in China, and forecast a steeper-than-expected mid-teens drop in fourth-quarter revenue, raising investor concerns about new CEO Elliott Hill's turnaround strategy.
Nike's stock fell 9% after the opening bell, hitting its lowest level since the pandemic, and was down 5% in midday trading. The company has lost 5% of its value this year, following a 30% plunge in 2024.
CEO Elliott Hill, who took the role in October, implemented a “Win Now” strategy focusing on key cities like Shanghai and Beijing, but results are not yet visible, according to Jay Woods, chief global strategist at Freedom Capital Markets. Nike attributes its struggles to weak consumer demand, an unfulfilled turnaround, and a new 20% tariff on Chinese goods, where nearly one quarter of its merchandise is produced.
CFO Matt Friend cited geopolitical dynamics, tariffs, volatile foreign exchange, and tax regulations as external factors. The company is also reversing a previous strategy of cutting third-party retailers, acknowledging their importance, as noted by Neil Saunders, an analyst at GlobalData Retail.
Despite some fast-tracked sneaker launches and a new partnership with Kim Kardashian's Skims, Nike faces stiff competition from Hoka and On and needs to move past prior management's innovation missteps.