No one expected Elliott Hill, Nike's new president and CEO, to turn the struggling company around overnight. But just 60 days into the new job, Hill gave observers much clearer insight into how long the road to recovery might be.
The Beaverton, Oregon-based company's second-quarter revenue fell 8% to $12.4 billion, down from $13.4 billion. Nike Direct revenues, including ecommerce and retail stores, sank 13%. And wholesale revenue slipped 3% to $6.9 billion.
The results were somewhat better than observers were expecting. In a conference call webcast for investors, Hill detailed plans to rebuild Nike's marketing muscle and put sport back at the center of everything the company does.
However, moving forward also involves clearing out much of the company's unwanted inventory, with promotional activity that will continue eroding sales and profits.
Hill, who spent 32 years working with Nike before rejoining as CEO in September, opened his first call with investors by detailing his meetings over the last 60 days with everyone from the NFL, NBA, WNBA, Michael Jordan, and key wholesale partners. "The consistent feedback we've heard is pretty simple: Let's see more of Nike being Nike. That starts with leveraging all the advantages that make us great: three of the world's most iconic brands, a dominant roster of athletes, teams, and leagues, unmatched patented innovation, and a deep catalog of products at every price point. Lately, we haven't been maximizing these strengths."
He says one problem is an imbalance between brand and performance marketing, which he will correct by intensifying brand spending. "We've become far too promotional. Entering the year, our digital platforms delivered roughly a 50-50 split of full price to promotional sales."
More brand spending will correct that. "We will reinvest in our brands to create stories that inspire and emotionally connect with our consumers during important sports moments and critical product launches," he said.
Getting back to growth will cause some short-term pain, as Nike dials up brand spending and slashes prices to get rid of unwanted inventory, and the company forecasts that next quarter's revenue will decline by a percentage in the "low double digits."
Nike's numbers were "a generally poor result by its usual standards," writes David Swartz, an analyst who covers Nike for Morningstar. "Moreover, the outlook for the rest of fiscal 2025 is dismal, as Hill intends to increase discounting to clear inventory ahead of new product releases in fiscal 2026."
While the turnaround is not imminent, Swartz believes "Hill is making the right moves to bolster Nike's brand value. His general plan is to invest in Nike's connections to global sports, which we regard as the firm's greatest advantage." He is also encouraged by Hill's commitment to investing in brand marketing while cutting expenses elsewhere.