Nike tops Q4 sales, profit estimates as CEO doubles down on sports focus

Nike reported a smaller-than-expected drop in fourth-quarter revenue and beat profit estimates on Thursday, as CEO Elliott Hill’s strategy to focus product innovation and marketing around sports begins to pay off.

The company, which has been grappling with competition in the running space, has heavily invested in running shoes and sneaker lines such as Pegasus and Vomero, and tried to cut its stock of older models such as the Air Force 1 and Air Jordan 1, through discounts.

Under Hill, who joined in October last year, Nike has rekindled relationships with wholesale partners, expanding the company’s presence at more physical retailers, and started selling on Amazon.com for the first time in six years.

The company’s fourth-quarter revenue fell 12% to $11.10 billion, compared with analysts’ expectation of a 14.9% drop to $10.72 billion, according to data compiled by LSEG.

Under Hill’s “win now” strategy, Nike is also investing more into sport-focused marketing to regain its edge as a sports brand.

The company on Thursday hosted an attempt by sponsored athlete Faith Kipyegon to run a mile in under four minutes. Paced by other star athletes in the glitzy, live-streamed event in a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record.

Nike reported fourth-quarter earnings per share of 14 cents, compared with analysts’ average estimate of 12 cents.

China continues to be a pain point in the reported quarter, the company said, as tougher economic conditions and competition hurt demand for Nike’s sneakers in the country.

Sales in China fell 21% in the fourth quarter, following a 17% fall in the prior three-month period.

Its gross margin for the quarter ended May 31 fell 440 basis points following a 330 basis points drop in the third quarter.

Nike’s shares were down 2% in extended trading. They have fallen 19.6% so far this year.