Nike, disappointing quarterly results and low visibility on future results

The decision not to publish estimates for the future is linked to this change in top management. Hill, in fact, will need time to prepare a new plan to turn around the company's fortunes. The market is counting on him to turn things around, so much so that Nike's shares have rebounded about 10% since the announcement of his appointment, although they are still down 18% since the beginning of the year. The investor day, scheduled for mid-November, has thus been postponed until a later date.

The path ahead for Nike is the one taken by competitor Adidas last year, when current CEO Bjørn Gulden, who arrived in early 2023, called the period ahead a 'reset year', thus lowering market expectations. After a year of lack of revenue growth (on a currency basis), Adidas returned to healthy growth in the first two quarters of 2024, so much so that Adidas shares have appreciated by around 90% since Gulden took over as ceo. And just last July, Adidas announced an upward revision of its 2024 profitability targets for the second time in three months against a backdrop of growing demand for classic sneakers and higher sales from dwindling Yeezy footwear inventories.

Nike's stock is under pressure after the withdrawal of financial guidance and double-digit revenue declines, and although management is correct in saying that 'a turnaround of this magnitude will take time', a return to growth that could justify the stock's multiple appears unlikely before the first half of 2026 at the earliest, Stifel analysts say in a note.

According to the report, revenue expectations fell due to weaker traffic on the company's digital channel, weaker retail trends across the market, and lower than expected final orders for the spring season. Analysts say they cannot support a bullish outlook for the stock until revenue growth recovers.

And if Nike remains in limbo for one or two years, space will open up for its competitors. Adidas and Puma will indeed have more time to try to gain market share in light of Nike's underperformance, writes Warburg Research analyst Joerg Philipp Frey in a note. According to the analyst, the company has underperformed its German peers Adidas and Puma for several quarters. Nike's data and outlook should not be seen as an indication of a substantial deterioration in the overall market, but rather a specific company, he adds. Adidas' shares were up almost one percentage point today, while Puma's were down 0.45 per cent.