Nike shares dip as investors fret over murky turnaround timeline (updated)

Foot Locker

02/10/2024 13:01

(Adds shares of peers in paragraph 5)
    By Ananya Mariam Rajesh
       Oct 2 (Reuters) - Nike  NKE.N  shares dropped about 8%
in premarket trading on Wednesday after the sportswear giant
withdrew its annual revenue target, leaving investors guessing
on the timeline for a turnaround under incoming CEO Elliott
Hill.
    The company on Tuesday also called off its investor day set
for Nov. 19, while CFO Matthew Friend said pulling the outlook
would give Hill "much-needed flexibility to evaluate Nike's
strategies and business trends".
    "Just how quickly a turnaround can happen is up in the air
... There's not anything really that I could say at this point
gives us a definite timeline or early hints to what is in store
for the future," said Jessica Ramirez, senior analyst at Jane
Hali & Associates.
    Last month, Nike named veteran executive Hill as CEO in
place of John Donahoe as demand dropped and rivals such as On
Holding  ONON.N  and Hoka gained market share, especially in
high performance and innovative running shoes categories.
    Shares of peers Under Armour  UAA.N  and Lululemon  LULU.O 
were down 2.3% and 1.6%, respectively, while retailer Foot
Locker  FL.N  dropped more than 2% in premarket trading.
    Nike's forward price-to-earnings ratio for the next 12
months, a common benchmark for valuing stocks, was 27.98,
compared with 27.08 for Deckers  DECK.N  and 35.14 for Adidas
 ADSGn.DE . 
    Hill is set to take over on Oct. 14 and investors were
pinning their hopes on the analyst day for clarity on Nike's
strategy until it canceled the Nov. 19 event. Nike did not
provide a fresh date. 
    "These next few months as we go into year end, (Nike is)
going to leave investors with a lot more questions than answers
and we didn't get any answers," said Jay Woods, chief global
strategist at investment banking firm Freedom Capital Markets.
    The Air Jordan sneaker parent said on Tuesday it had to
offer higher promotions to help drive sales in the quarter and
signaled a weaker holiday quarter.  
    "Nike is deep in the abyss of the turnaround," Bernstein
Societe Generale analysts wrote in a note. "Early signs of
market traction look positive, but can't translate into hard
numbers yet while mark down actions drag down sales and
margins."

 (Reporting by Ananya Mariam Rajesh and Savyata Mishra in
Bengaluru; Writing by Aishwarya Venugopal; Editing by Maju
Samuel and Arun Koyyur)
 ((Aishwarya.Venugopal@thomsonreuters.com;))