Nike reported second-quarter earnings after the market close Thursday of $12.35 billion, down 8% from the prior year’s three months ending Nov. 30. Earnings per share were $0.78, representing a 24% decline.
Both figures handily beat Wall Street’s diminished expectations of $12.1 billion for sales and $0.63 for EPS, according to S&P Global Market Intelligence.
“We lost our obsession with sport,” new Nike CEO Elliott Hill said on the earnings call. “Moving forward, we will lead with sport and put the athlete at the center of every decision.”
Hill said that prioritizing digital revenue—a focus under previous CEO John Donahoe—had impacted the health of the marketplace. He promised an “unwavering commitment to our wholesale partners” and to put product wherever consumers shop, calling it Nike’s North Star.
Hill also lamented that centralization had impacted resources in key countries and cities, and he promised to reverse that course. Another shift for the brand is “sport-led teams” that will be segmented by men’s, women’s and kids, per Hill.
The company said it is shifting Nike Digital to a full-priced model and reducing promotional activities after a short-term liquidation of excess inventory through “less profitable channels.” The strategic actions will result in third-quarter revenue down by a low double-digit percentage.
It’s the company’s first quarterly report under Hill, who returned to the embattled sportswear giant on Oct. 14, replacing Donahoe. Hill spent 32 years at Nike in various senior leadership positions, most recently as the company’s president, consumer and marketplace, before retiring in 2020.
The brand has struggled with its innovation pipeline, issues in China and slowing growth. In June, the company reported year-end revenue of $51.4 billion, a mere 0.3% increase over the previous fiscal year. The only years worse in the past two decades for the Swoosh were at the start of COVID-19 (2019-20) and on the heels of the financial crisis (2009-10). Revenue rose 10% during the previous year.
In October, Nike postponed its Nov. 19 investor day and announced it would only provide quarterly guidance moving forward. “This provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends, and develop our plans to best position this for fiscal 26,” Matthew Friend, Nike CFO, said on the first-quarter earnings call.
The brand did pick up a pair of recent wins with U.S. sports leagues. It reached a 12-year contract extension with the NBA and WNBA to be the leagues’ global outfitting, merchandising, marketing and content partner through 2037. Nike also extended its deal with the NFL to be the exclusive uniform provider through 2038.
Wall Street initially cheered the second-quarter results in after-hours trading where the stock jumped 10%, but the gains were wiped out during the earnings call. Shares were down 29% for the year at the market close.
