Nike Inc's Turnaround Strategy under CEO Elliot Hill

Investing.com — Nike Inc's (NYSE:NKE) turnaround strategy under new CEO Elliot Hill is creating short-term challenges but could set the stage for recovery by 2025, according to a note from Truist.

Lowered Guidance

The company has decreased its guidance for the second half of fiscal 2025, projecting a low-double-digit percentage revenue decline in the third quarter and anticipates gross margin pressure of 300-350 basis points. Fourth-quarter challenges are expected to intensify due to accelerated inventory clearance and increased marketing investments.

Conservative Outlook

Analysts express that the outlook may be conservative, given that this earnings call was Mr. Hill’s first opportunity to address investors since taking over as CEO.

Truist has also cut its FY25 earnings forecast to $2.00 per share from $2.50, pointing to heightened near-term pressures, and has lowered Nike's price target to $90 from $97.

Strategic Initiatives

Hill’s initiatives include:
– Improving wholesale partnerships
– Boosting the direct-to-consumer business
– Revamping brand marketing

These moves are expected to simplify year-over-year comparisons and create opportunities for growth in 2026.

Investor Sentiment

The brokerage believes investor sentiment is nearing a bottom, noting that shares have remained relatively stable despite consecutive guidance cuts. Truist stated that Hill’s decision to accelerate restructuring is prudent and positions Nike for long-term success, with the comprehensive plan potentially leading to outperformance in the coming years.