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Latest Business News: Tuesday, sportswear giant Nike said that first-quarter revenue fell more sharply than forecast, hurt by weak consumer demand for its shoes worldwide and stiffer competition from newer brands. Gross margin increased 120 basis points to 45.4%, due in part to initiatives to reduce costs through employee layoff and fewer contributions from supply chains from underperforming products.
Shares dropped 2.5% in after-market trading. EPS of 70 cents in the first quarter, above what analysts expected to be 52 cents. Based on data that was sourced from LSEG analysts, this information was reported by the company.
The company has yet to benefit from the innovation speedup movement that was initiated in its new product lines-Air Max Dn and Pegasus 41-to hasten its lines.
Analysts said Nike hasn’t made any moves to increase demand and regain market share from brands like Deckers’ Hoka and Roger Federer-backed On.
It announced this September that the company veteran Elliott Hill, who served at Nike for 32 years before retiring in 2020, would take over the current CEO on October 14 to revamp sales and win over market share.
Analysts under Hill, therefore, expect the company to begin from scratch and re-build wholesale relationships that had waned under outgoing CEO John Donahoe.
Where Donahoe focused instead on building sales directly through company-owned stores and its website, U.S. retailers like Foot Locker and Dicks Sporting Goods quickly filled the shelf space Nike had vacated with fashionable competitors like On, Hoka, and New Balance.
In March, the Nike executives acknowledged that direct-to-consumer push was generating neither growth nor growth but had contributed to a slide in its market share.
While decline in consumer spending in China has caused damage to the sportswear giant after a weak post-pandemic recovery with high youth unemployment and a lingering property downturn, consumers in the region have lately opted for locally produced goods.
The company’s quarterly net revenue fell to $11.59 billion from the previous year’s level of 10.4%. Analysts had estimated a 10% drop to $11.65 billion, according to an LSEG-complied analysts’ tally.
