Investment website — Nike Inc. (NYSE:)’s turnaround strategy under new CEO Elliott Hill creates short-term challenges but could pave the way for a recovery by 2025, Truist said in a note.
The company lowered its guidance for the second half of fiscal 2025, anticipating a low double-digit percentage revenue decline in the third quarter and gross margin pressure of 300-350 basis points. Q4 challenges are expected to intensify due to accelerated inventory liquidation and increased marketing investments.
“We believe the outlook may be conservative, given that this earnings announcement was the first time Mr. Hill has addressed investors since taking over as CEO,” the analysts wrote.
Truist cut its FY25 earnings forecast to $2.00 per share from $2.50, citing amplifying near-term pressures. It also lowered its price target for Nike to $90 from $97.
Hill’s initiatives include improving wholesale partnerships, strengthening the direct-to-consumer business, and revamping the brand’s marketing. Such moves are expected to simplify year-on-year comparisons and create growth opportunities in 2026.
The brokerage believes investor sentiment is nearing a bottom, noting that stocks have been relatively stable despite successive guidance cuts.
Truist said Hill’s decision to accelerate the restructuring process is a wise decision and positions Nike for long-term success, adding that the company’s comprehensive plan could lead to superior performance in the coming years.
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