In this articleNKEFollow your favorite stocksCREATE FREE ACCOUNTCustomers shop at a Nike store in an outlet mall in Los Angeles, Nov. 8, 2024.Frederic J. Brown | Afp | Getty ImagesNike’s turnaround will take a bit longer than expected under new CEO Elliott Hill, who outlined his strategy to return the company to growth on Thursday after the retailer blamed deep discounting for declining revenue and profit.The sneaker giant has been relying on promotions to drive sales, and it plans to return its online business to a full-price model, but first, it will need to aggressively liquidate old inventory through “less profitable channels,” said Hill and finance chief Matt Friend.”What I’ve seen is traffic in Nike direct, digital and physical, has softened because we lack newness in product and we’re not delivering inspiring stories,” said Hill. “The result is we’ve become far too promotional… Entering the year, our digital platforms were delivering roughly a 50/50 split of full price to promotional sales. The level of markdowns not only impacts our brand, but it also disrupts the overall marketplace and the profitability of our partners.”As a result, Nike expects gross margins to be down between 3 and 3.5 percentage points during the holiday quarter. It also expects sales to be down low double digits, worse than what analysts surveyed by LSEG had expected.While expectations were low for Nike’s most recent quarter headed into Thursday’s release, the sneaker giant handily beat Wall Street’s expectations on the top and bottom lines.Here’s how Nike did in its fiscal second quarter of 2025 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:Earnings per share: 78 cents vs 63 cents expectedRevenue: $12.35 billion vs $12.13 billionNike shares initially spiked following the results but pared gains after Hill delivered his opening remarks on a call with analysts.Nike’s reported net income for the three month period ended Nov. 30 fell to $1.16 billion, or 78 cents per share, compared with $1.58 billion, or $1.03 per share, a year earlier.Sales fell to $12.35 billion, down about 8% from $13.39 billion a year earlier.Hill, who started with Nike as an intern in the 1980s before leaving the company in 2020, is tasked with turning around the world’s largest sportswear company after it fell behind on innovation, ceded market share to competitors and botched its selling strategy.”I have an irrational love for this company. I know Nike inside and out, take pride in what the brand stands for and want to see the company succeed,” Hill said in his opening remarks to analysts. “In a moment where our team, brand and business are being challenged, my singular focus is to help get us back on track, to get back to winning.”Elliott Hill, president and CEO of Nike, Inc.Courtesy: NikeDuring his opening remarks, Hill delivered a resounding rebuke of the strategies that have come to define his predecessor John Donahoe’s tenure as CEO.He said the company had spent too much of its resources focused on driving online sales, paying for performance marketing and isolating wholesale partners — strategies that he now plans to unwind. He acknowledged that key wholesale partners feel Nike has turned its back on those partnerships and said the company is now working to build back their trust.”We know our sales teams will have to earn every ‘open to buy’ dollar, but we’re investing to make sure our partners feel supported,” said Hill. “We’ll do more than just sell in our products. We’ll actively suppor …
