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Tag: elliott hill

  • Nike Shares Drop to 12-Year Low as China Slump and Product Overhaul Delay Recovery

    Nike Shares Drop to 12-Year Low as China Slump and Product Overhaul Delay Recovery

    Nike shares dropped 8 per cent to 32.22 dollars on Friday. The drop followed deeper projected sales declines through 2028 and another round of job cuts.

    The stock now trades at its lowest level in 12 years. It is down more than 80 per cent from its 2021 peak of about 175 dollars. Earnings and market value have both halved since chief executive Elliott Hill came out of retirement in October 2024 to lead a corporate turnaround.

    Delayed savings and revenue pressures

    Management disclosed that financial benefits from its current restructuring program will not flow through until fiscal 2029 and 2030. That extended timeline forces the company to absorb lower revenue across wholesale partners and direct-to-consumer storefronts. Working through excess stock remains a hurdle.

    Three core segments continue to drag on performance: classic sportswear, the Jordan brand, and the Greater China business. Together, these categories generate more than half of Nike’s total revenue. Any recovery depends on stabilizing demand in those lines.

    Wholesale friction across Asian retail corridors

    For department store operators and multibrand sneaker retailers across Asia, the slow recovery alters floor plans. Retailers previously relied on high-margin Jordan releases and volume lifestyle sneakers. Many have reallocated shelf space to competitors that offer clearer product roadmaps and faster inventory turns.

    Nike previously cut back wholesale allocations to chase higher digital margins, a decision that damaged long-term relationships with Asian distributors. Hill has worked to restore wholesale supply agreements over the past two years. Still, retail partners are no longer guaranteeing premium display real estate without stronger consumer pull.

    Discounting risks in mainland China

    In mainland China, consumer spending has shifted toward value. That shift forced Nike to clear discounted inventory across digital platforms and factory outlets. Heavy promotions eroded brand equity in tier-one and tier-two cities, where local sportswear brands and specialized performance labels have gained market share.

    RBC Capital Markets analyst Piral Dadhania noted that revenue pressure is unlikely to ease quickly. “Things are going to get worse before they get better,” Dadhania said.

    The steps that led to the slump

    Strategic pivots made earlier in the decade created the current downturn. At the time, the business prioritized direct-to-consumer sales, reduced tie-ups with wholesale distributors, and leaned on lifestyle iterations of existing footwear franchises rather than new athletic performance models. Hill returned to reverse those missteps. He trimmed headcount by 1,400 staff earlier in 2026 and refocused development on core sports.

    Investors and retail partners now look to Nike’s upcoming investor day on November 16 and 17. Executive leadership must present a multi-year roadmap detailing product delivery schedules and margin targets for the fiscal year ending in May 2028.

  • Nike Appoints LVMH Executive Alexandre Arnault to Board

    Nike Appoints LVMH Executive Alexandre Arnault to Board

    Nike has appointed LVMH executive Alexandre Arnault to its board of directors. The hire adds luxury brand experience as the company battles an 80 percent share price collapse from its 2021 peak.

    Revenue reached $46.4 billion during fiscal 2026. That was a 2 percent decline in constant currency, driven by slower demand for core footwear lines across global markets.

    Arnault serves as deputy chief executive of Moët Hennessy, the wine and spirits division of French luxury conglomerate LVMH. He previously directed product and communications at Tiffany following its $16 billion acquisition in 2021. Before that, he ran luggage maker Rimowa for four years, leading collaborations with streetwear and designer labels.

    Luxury Playbook Meets Mass Footwear

    He joins a boardroom that includes Nike co-founder Phil Knight and Apple chairman Tim Cook. Arnault becomes the group’s first director drawn directly from luxury retail. Chief executive Elliott Hill wants to sharpen brand positioning across direct retail and wholesale channels. That push focuses on streetwear and basketball, where product excitement has waned.

    Regional markets across Asia-Pacific and Greater China present structural headwinds. Domestic sportswear groups have captured market share there, while specialist running brands claim prime mall space. Collaborations and elevated styling generate social cachet. Still, they cannot replace the volume engine of core running shoes that fill supplier order books and franchise retail floors.

    Streetwear Weakness and Wholesale Friction

    Retail partners have contended with slower sell-through across Nike Sportswear and Jordan lines. This forced discounts that compressed profit margins over recent quarters. Hill stated during the fiscal fourth-quarter review that weak demand in lifestyle categories continues to hurt current pricing and future order commitments.

    Distribution strategies between the two sectors differ sharply. Luxury houses thrive on tight product allocation and high direct margins. Mass sportswear operators in Asian metropolitan centres rely on wide availability, wholesale scale, and predictable replenishment.

    Delisting From S&P 100

    A sharp drop in valuation led S&P Dow Jones Indices to schedule Nike’s removal from the S&P 100 index on September 21. That ends an 18-year presence. The company’s stock has dropped 50 percent since the start of 2026.

    Pershing Square Capital Management founder Bill Ackman endorsed the board addition publicly. Ackman built and exited an equity position in Nike between mid-2024 and early 2025. Mark Parker, executive chairman of Nike, said Arnault had earned a reputation for helping global brands evolve in a complex marketplace.

    Earnings Test on October 1

    Hill told investors earlier in September that management is restructuring product creation and delivery for a decade-long recovery rather than quarter-to-quarter fixes. The overhaul covers design, manufacturing, and distribution to re-establish athletic performance credibility.

    Investors turn next to October 1, when Nike reports financial results for the first quarter of fiscal 2027. Market consensus projects quarterly revenue of $11.35 billion and earnings of $0.45 per share.