Nike’s turnaround is expected to take longer under new CEO Elliott Hill, who recently shared his strategy to revive the company’s growth. The retailer attributed its declining revenue and profit to heavy discounting and is now planning to shift its online business back to a full-price model. However, before implementing this change, Nike aims to clear out old inventory through less profitable channels, according to Hill and finance chief Matt Friend.
Hill highlighted the need for newness in products and inspiring stories to drive traffic in Nike’s direct digital and physical platforms. He expressed concerns about the excessive promotional activities that have impacted the brand and disrupted the marketplace. As a result, Nike anticipates a decrease in gross margins and sales for the holiday quarter, which is worse than analysts’ expectations.
Despite low expectations for Nike’s recent quarter, the company exceeded Wall Street’s projections for both revenue and profit. Hill, who rejoined Nike after leaving in 2020, is focused on revitalizing the sportswear giant by addressing issues related to innovation, market share loss, and selling strategies.
During his remarks, Hill criticized the strategies of his predecessor, John Donahoe, emphasizing the need to rebuild relationships with wholesale partners and refocus on supporting mutual profitability. He acknowledged the company’s shift away from its core values of athleticism and performance, leading to a loss of market share to competitors.
Nike’s recent performance showed declines in sales across regions, with China experiencing an 8% drop and North America seeing an 8% decline. The company’s acquisition of Converse also contributed to the overall decrease in sales. Hill’s efforts to steer Nike back on track have shown some positive outcomes, such as the renewal of the contract with the National Football League, boosting confidence in the brand’s future.
Despite facing challenges and a decline in stock value in 2024, Nike is striving to regain its position as a leading sportswear company under Hill’s leadership.
