PREVIEW-New Nike CEO Hill gets his chance to lay out turnaround plan

By Nicholas P. Brown, Ananya Mariam Rajesh

NEW YORK, Dec 18 (Reuters) - Two months into his tenure as Nike NKE.N CEO, Elliott Hill gets his first shot on Thursday to convince investors he can rescue the flailing sportswear company after a year stained by layoffs and cratering sales.

Platitudes from Hill will not be enough, analysts say, when Nike reports quarterly earnings. To satisfy markets, Hill needs to lay out a plan to boost innovation, repair relationships with retailers and steady sales at a brand weathering the loss of market share to nimbler competitors such as Deckers' DECK.N Hoka and On ONON.N.

"He's really under the microscope because he's given himself so much time to come up with a structure and a game plan," said Jay Woods, chief global strategist at investment banking firm Freedom Capital Markets, referring to Nike's decision to postpone its November investor day as Hill settled into his role.

Nike did not immediately respond to a request for comment.

Analysts say they understand a turnaround will take a few quarters. Nike's replacement of numbers-driven CEO John Donahoe in October with company veteran Hill — who started at Nike as an intern in 1988 - suggests the board wants holistic change. "I don't think there will be a short leash," said Morningstar analyst David Swartz.

Still, the pressure is on for a company that has lost 2% of its U.S. market share since the start of 2024, and 6.2% in Europe, according to Consumer Edge, a company that tracks credit and debit transaction data.

Second-quarter revenue is expected to fall 9.4% to $12.13 billion, according to data compiled by LSEG. Nike's profit per share is expected at 63 cents, compared to $1.03 a year ago.

SHOPPERS COOL TO BRAND

Consumers' intention to buy Nike products is lower than it was a year ago, according to data from HundredX, a company that uses surveys to gauge public sentiment about brands and retailers. The decline is sharpest among young consumers, a key demographic.

Early holiday shoppers were not Nike's saviors. Foot Locker FL.N, which last year purchased 65% of its athletic merchandise from Nike, lowered its annual sales forecast this month, blaming soft demand for Nike shoes in the quarter ending Nov. 2.

Overall Nike sales at retailers such as Foot Locker, Walmart WMT.N, Target TGT.N and Dick's Sporting Goods DKS.N were down 7% from a year ago for the quarter ending Nov. 30, according to data from Yipit, which tracks sales receipts.

Online sales edged up 1% year over year in the 15 days ending Cyber Monday, lagging inflation, according to credit-card swipe tracker Facteus. Sales at Nike stores fell 7% in the same period, Facteus said.

Nike has struggled since deciding in 2020 to pivot away from third-party retailers. In February, less than two months after announcing sweeping cost cuts, it said it would lay off 2% of its 80,000 workers.

It has since vowed to rebuild relationships with stores. Many analysts expect Nike’s turnaround to hinge on reviving the core business that made it successful in the first place: running.

At a running conference last month in Austin, Texas, Nike announced it would double down on three running franchises - Pegasus, Structure and Vomero - launching various iterations of each shoe next year, at different price points, according to Telsey Advisory Group analyst Cristina Fernandez.

Fernandez noted she suspects the strategy was Hill's decision.

(Reporting by Jessica DiNapoli in New York; Editing by Rod Nickel)

((Jessica.DiNapoli@thomsonreuters.com; 845-591-4428; Reuters Messaging: Twitter: @jessicadinapoli))