While Nike's Q1 reported missed revenue estimates amid a change in CEO, surging Chinese stocks could prove to be a turning point. Managing director of TD Cown John Kernan explains. Nike Inc. Chief Executive Officer Elliott Hill is about to face his first earnings call since accepting the top job in September, and Wall Street has plenty of questions.
What is the world’s largest athletic-wear company doing to repair damaged retail partnerships? How is Hill moving to unify his demoralized staff and streamline production? And, most importantly, what is Nike doing to make its brands cool again? Hill’s answers will be vital to Nike’s future. The company is seeing more competition from sneaker upstarts, like On Holding AG and Deckers Outdoor Corp.’s Hoka label, even as demand fades for its once top-performing product lines such as Air Force 1s, Air Jordan 1s and Dunks. This year, Nike shares are down 29%. Nike’s analysts aren’t expecting immediate improvements, since they foresee a third straight quarter of falling revenue when the company reports earnings Thursday afternoon. But investors want to hear a detailed turnaround plan. “Hill has a long to-do list to get Nike running on all cylinders,” Jessica Ramírez, a senior research analyst at Jane Hali & Associates, said in a note to clients. The company “will face tough competition from a robust and highly competitive sports industry.” So far, Hill has only given hints about the direction he wants to take. In his first week, he spoke to employees at headquarters in Beaverton, Oregon, and acknowledged challenges the company faces. “Yes, we’re in a tough moment right now,” Hill said in a company interview. “We’ve been there before. And I can tell you that we will do what we’ve done before to win: Get back to a sharp focus on the consumer.”When Hill was hired, Nike’s first order of business was to wipe the slate clean for hi