Nike Beats Estimates in New CEO's First Quarter

Nike Beats Estimates in New CEO's First Quarter

Nike (NKE) exceeded analysts' expectations in its fiscal second-quarter earnings, marking the first quarter under new CEO Elliott Hill, who assumed the role in October.

The company reported net income of $1.16 billion on revenue of $12.35 billion, surpassing estimates of $968 million in net income and $12.12 billion in revenue, according to Visible Alpha. However, these figures are below last year’s $1.58 billion profit on $13.39 billion in revenue.

“We’re taking immediate action to reposition our business to drive long-term shareholder value,” said Hill. He outlined initiatives focusing on key sports, cities, and countries, while scaling back promotional events in Nike’s online shopping experience.

Nike shares initially rose in after-hours trading but later erased most of those gains. The stock remains down nearly 30% for 2024 as of Thursday's close.

CFO Matthew Friend noted that the quarter met expectations and highlighted progress in shifting Nike's product portfolio. He projected third-quarter revenue to decline slightly year-over-year, with profit margins under pressure due to new investments.

The company had previously suspended its outlook in the first quarter to allow Hill more time to strategize. Nike’s recent performance reflects challenges from increased competition in key markets like China and the U.S., coupled with cost-cutting and a focus on newer products.

Analysts remain optimistic about Hill’s leadership, noting that as a company veteran, he brings potential for a turnaround despite the persistent challenges that faced his predecessor, John Donahoe.