No Smooth Sailing in Sight for Nike for the Next Few Quarters

UPDATE: Nike’s New CEO Elliot Hill To Take The Reigns As Company Pins Hopes On Growth

It is not going to be smooth sailing for Nike for the next few quarters, but CEO John Donahue is upbeat about the success of the company’s turnaround plan.

Addressing a virtual shareholder meeting earlier this week, Donahue said the turnaround hinged on four lines of attack – focusing on sports, “bigger, bolder storytelling,” rebuilding Nike’s wholesale business, and ensuring that new products reach the market quicker.

Company Woes Began During the Pandemic

Nike’s woes began during the pandemic when the company focused on in-house product sales and mobile apps, leaving shelf space free at established retailers for its competitors.

The company is now attempting to rebuild lost relationships and regain shelf space. Disgruntled shareholders attending the virtual meeting were told by Nike executives that the plan is to regain ground lost to competitors like On and Hoka.

Shareholders are Disgruntled and Skeptical

The meeting took place in an atmosphere of shareholder skepticism about Donahue’s ability to successfully execute the turnaround plan, mass company layoffs, and a depressed stock market.

The CEO’s optimism was not shared by the shareholders who have seen their investments drop by 2% in trading when the meeting closed, against a somewhat stagnant stock market.

At the meeting, shareholders rejected several proposals including gender equity, labor rights, and climate change. The voting results were not disclosed. The vote tallies are expected to be filed within the next few days with the U.S. Securities and Exchange Commission.

Executives Acknowledge that Nike is Facing Challenging Times

Donahue conceded that the company had recently experienced a few stumbles but assured shareholders that the fiscal year that began on June 1 was a ‘transition year.’ However, company executives acknowledged that Nike is facing challenging times.

The company knows it has work to do to reach its full potential, Donahue stated. Adding that Nike is building momentum ‘in areas that matter most,’ Donahue was referring to the July announcement of the return of former executive of third-party retailer sales, Tom Peddie.

Donahue said Nike has ‘the right playbook’ to succeed in its turnaround plan.

Executives allowed four pre-screened questions at the end of the shareholder meeting. No questions relating to shareholder proposals or Nike’s sustainability efforts were heard.

The next Nike earning report will take place on October 1 and the company will host an investor day in November. This is an event at which the company has historically announced significant new business ventures.