Nike is no longer the fastest on the track. The American sportswear company is still immersed in a plan to reverge the old economic laurels. The largest shoe company in the world turned its business strategy and placed Elliot Hill as CEO with the mandate of refloating the group in a business crisis.
The financial results presented on Tuesday reflect that Elliot’s strategy begins to bear fruit, but there is still a lot of work to be done. The Oregon -based company achieved L, which represents a 31% decrease compared to the same period of the previous year, according to the information published by the company. In spite of everything, investors have received the results with satisfaction because they improve expectations. And that the gross margin is also reduced to 42%, which reflects a lower sale price for higher discounts and combination of channels.
Analysts, however, focus on the evolution of sales that improve slightly after several falls of falls. The sports company achieved a turnover of 11,720 million dollars, 1% more in comparable terms than in identical quarter of the previous year.
Elliot has promoted a strategic plan to recover lost market share in front of brands such as ON, Saucony or Hoka, which have popularized among the runners. In addition, he is trying to reverse the course of the group that under the previous CEO, John Donahoe, had focused on the lifestyle business, segregating their businesses between the lines of men, women and children to the detriment of the sections by types of sports. Donahoe had also changed its traditional distribution strategy focused on wholesalers and promoting runner clubs to get more online distribution through platforms. Now Elliot wants to return to the origins and structure the company’s business by types of sports.
“This quarter, Nike has promoted its improvement thanks to our Win Now (win) actions in our priority areas of North America, wholesale and running,” said Elliott Hill, president and executive director of Nike. “While we are reaping successes, we still have work ahead so that all sports, geographies and channels follow a similar course.
Investors have highlighted the improvement of wholesale sales that have reached 6,800 million dollars, which means an increase of 7%, while sales of their products in North America increased by 4%, to 5,020 million dollars, exceeding the expectations of analysts.
Another of Nike’s black points are inventories. With the previous management team, products were accumulated in the stores and the company was forced to sell with great discounts to try to manage their stocks. However, the inventories of the first quarter were reduced by 2% compared to the previous year due to the increase in the costs of the highest tariffs, the company said.
Although the popular sports company begins to show recovery symptoms, executives acknowledged that it would still take time to achieve stabilization. “Progress will not be linear,” said Nike’s financial director Matthew Friend, in a statement. “While we deal with various external obstacles, our teams focus on executing what we can control.”
Another of the points that analysts stand out is the reduction of spending to generate demand, which is reduced by 3%. This chapter includes the lowest brand marketing expense for lower investment in sporting events, partially compensated by a higher sports marketing expense. We will have to wait at the end of the race at the end of the track to see how Elliot’s career ends.
