The dawn of a new and sportier Nike is imminent, the sportswear giant’s new leader says.
Nike CEO Elliott Hill, who took the helm in October, outlined plans to revamp the sneaker giant in a Thursday earnings call, where he promised investors that the company would shift focus and resources to make “sport our North Star” again.
“Traffic … has softened because we’ve lacked newness in product and we’re not delivering inspiring stories. We’ve become far too promotional,” said Hill.
The level of markdowns for Nike products in recent times “not only impacts our brand, but it also disrupts the overall marketplace and the profitability of our partners,” according to Hill.
Hill, a longtime Nike executive, was brought back to help the Oregon based sportswear company regain its footing and revive the brand after “several quarters of weak sales,” which has taken a hit as competitors step in with more innovative footwear.
Nike shares were down 1.5% as of Friday morning and have also lost more than half of its value since November 2021 while struggling to match new rivals in the footwear game, Reuters reported.
“We lost our obsession with sport,” Hill said. “Moving forward, we will lead with sport and put the athlete at the center of every decision. The sharpness in each sport is what differentiates our brand and our business and fuels our culture.”
‘Let’s see more of Nike being Nike,’ CEO says
Hill and the Nike leadership team have received “consistent feedback” from teammates, partners, and consumers, who have would like to see “more of Nike being Nike.”
“We believe we have one of the strongest mission statements of anyone,” Hill said. “And that is ‘to bring Inspiration and Innovation to every athlete in the world.’ To me, inviting 8 billion athletes into sport is a pretty powerful purpose.”
The best way for Nike to be Nike, according to Hill, is to an prioritize athlete-driven approach, create demand for the brand, support on-the-ground teams in major cities and countries and re-construct an integrated marketplace across Nike Direct and Wholesale.
Some products that are “distinctly Nike” and are already paving the way for a sport-driven rebrand include “the Pegasus 41, Nike Shox, the Kobe lineup, Vomero 18 and Pegasus Premium.”
Hill is “optimistic” about the moves that are currently underway in the brand and product sector but warns sustainable and profitable growth will be an uphill battle, one they’re prepared for even it comes at the expense of “near-term results.”
Nike’s Q2 financial performance “largely met expectations,” but net revenue fell 7.7% to $12.35 billion, which was less than the 9.41% drop analysts had expected, according to Reuters.
“This isn’t going to be easy, but we’re ready for the challenge, said Hill. “I’m confident we are all aligned and focused on the areas that will make the most immediate impact.”
Financial firms, including Kavar Capital Partners, predict that it will take Nike years to recover.
“The recovery is going to be a multi-year process, but he seems to be going back to the roots, back to Nike being Nike,” John Nagle, chief investment officer at Kavar Capital Partners, which owns Nike shares shared with Reuters.
Contributing: Reuters
