New Nike (NKE.N) CEO Elliott Hill’s plan to refocus on sports that are core to its brand like basketball and running allayed some investor worries on December 20, but Wall Street initially was taking a wait-and-see approach to the promised comeback. The longtime Nike executive returned to the company in October to steer a turnaround that investors hope will help reverse several quarters of weak sales and revive the Nike brand, which has taken a hit as rivals step in with more innovative footwear.
In his first public address as CEO on a post-earnings call on December 19, Hill said Nike had “lost its obsession with sport” and vowed to put it back on track after a period where its focus on direct-to-consumer sales left it with high inventories, necessitating steep discounting. Shares of Nike, which have lost about half of its value in the last three years, were down 1.5 per cent on December 20 morning.
The company is valued at a discount to its peers and it has struggled to match upstart rivals. “The recovery is going to be a multi-year process, but he(Hill) seems to be going back to the roots, back to Nike being Nike,” said John Nagle, chief investment officer at Kavar Capital Partners, which owns Nike shares. “(Hill plans to shift focus) away from some of the streetwear and fashion that had taken over the brand, the heavy discounting and the neglect of retailers.
Just taking it back to what worked,” Nagle said. Still, at least 10 brokerages cut price targets on t.
