NIKE’S CEO, Elliott Hill, is wasting no time by addressing the challenges facing the sportswear giant.
Following a disappointing 8% revenue drop in Q2, Hill, who took over the role in October, laid out an ambitious plan to rejuvenate the brand on Thursday.
In his plan, Hill outlined a new strategy.
This new approach focuses on rebuilding partnerships with wholesale collaborators, boosting investments in brand storytelling, as well as strengthening local market teams.
The measures aim to reverse the downward trend and restore Nike’s position as a market leader.
The company reported Q2 revenues of $12.4 billion, which is down from $13.4 billion during the same period last year.
But that wasn’t all.
Declines were seen across the board. Nike’s direct revenue fell 13% and wholesale revenues slipped by 3%.
Net income also dropped significantly, down 26% to $1.2 billion.
THE PROBLEM
During Hill’s first earnings call as CEO, he didn’t shy away from sharing hard truths.
He criticized Nike for losing sight of its core identity, citing an overreliance on a limited range of popular products and insufficient investment in brand development.
The CEO also cited a centralization of resources that neglected key cities and markets as a major issue.
“We need to get back to the basics of sport and strengthen our emotional connection with consumers,” Hill told analysts.
“The consistent feedback we’ve heard is pretty simple: Let’s see more of Nike being Nike,” Hill said.
LOOKING FORWARD
The CEO further shared, “Some partners and channels feel we’ve turned our back on them, and we stopped engaging consistently.”
Hill emphasized that the retailer would focus its attention on earning the trust of its wholesale partners once again as well as rebuilding those important relationships.
In an effort to move proactively, Hill explained that he’d spoken to many of the brand’s wholesale partners directly.
This includes the likes of Dick’s Sporting Goods, Foot Locker, and JD Sports, as well as major sports organizations like the NBA.
Rebuilding relationships with wholesale partners will help to reestablish a balanced distribution network.
While greater investment in brand storytelling aims to rekindle consumer enthusiasm.
Needham analyst Tom Nikic said, “While fundamentals will be very challenged in the near term, we believe that it takes a back seat to the narrative, which is that of a veteran athlete coming out of retirement to pull his once-proud team out of the dumps.”
The CEO’s willingness to confront the company’s shortcomings head-on and proactively pivot may signal a new chapter for the iconic brand.
Earlier this year, Nike revealed its futuristic-looking footwear that massages your feet and even heats up while you’re wearing them.
