Two months into his tenure as Nike’s CEO, Elliott Hill faces his first major test on Thursday as the company reports quarterly earnings. Following a tumultuous year of layoffs, falling sales, and declining market share, Hill is under pressure to demonstrate a clear strategy for turning around the struggling sportswear giant. Analysts emphasize that Hill’s presentation must go beyond generalities to address innovation, retailer relationships, and steadying sales as Nike battles competitors like Deckers’ Hoka and On Running.

Hill, who began his career at Nike as an intern in 1988, was named CEO in October, replacing John Donahoe. The move is seen as a signal that Nike’s board seeks holistic change, but patience has its limits. Revenue for the second quarter is expected to fall 9.4% to $12.13 billion, while earnings per share are forecast to drop from $1.03 a year ago to 63 cents. Data from HundredX shows a decline in consumer intent to purchase Nike products, with the sharpest drop among younger shoppers, a key demographic for the brand.

Holiday sales have provided little relief. Foot Locker, which heavily relies on Nike products, recently cut its annual sales forecast due to weak demand. Sales of Nike products across major retailers like Walmart, Target, and Dick’s Sporting Goods fell 7% year-over-year in the quarter ending November 30, according to Yipit. Nike’s own store sales fell by the same percentage, while online sales rose just 1%, underperforming inflation, according to Facteus.

Since pivoting away from third-party retailers in 2020, Nike has faced challenges rebuilding those relationships. Earlier this year, the company announced layoffs affecting 2% of its workforce, adding to a sense of instability. Analysts say Hill’s ability to restore Nike’s core business, particularly its focus on running, could determine the company’s recovery. At a recent running conference in Austin, Texas, Nike announced plans to expand its Pegasus, Structure, and Vomero lines with new iterations at varying price points, a strategy many believe reflects Hill’s influence.

Jay Woods, chief global strategist at Freedom Capital Markets, noted that Hill has had time to craft a plan, raising expectations for this earnings call. Morningstar analyst David Swartz suggested the board is unlikely to demand immediate results but acknowledged the mounting pressure. With Nike losing 2% of its U.S. market share this year and 6.2% in Europe, Hill’s task to revive the brand remains urgent. Nike did not respond to requests for comment.

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