Nike shares down as company withdraws annual guidance, postpones investor day

Investing.com -- Nike reported Tuesday mixed fiscal first-quarter results as revenue fell short of analyst estimates and the sportswear giant said it would postpone its investor day amid a leadership transition. Moreover, the company withdrew its annual revenue guidance, just as a new CEO is set to take charge.

Nike Inc (NYSE:NKE ) was down more than 5% in premarket trading Wednesday. 

Nike announced earnings per share of $0.70 on revenue of $11.59 billion. Analysts polled by Investing.com anticipated EPS $0.52 on revenue of $11.65B.

The beat on the bottom line was given by a 120 basis points jump in gross margin to 45.4%.

Nike postponed its previously announced investor day and said it would address its approach to guidance on the post-earnings conference call given that it is in the midst of a chief executive transition. Nike had previously projected an annual revenue decline in the mid-single digits.

On Sept 19, Nike said it had appointed Elliott Hill as president and chief executive. Hill is set to take the leadership reigns on Oct. 14.

Commenting on the report, Bernstein analysts said that Nike "is deep in the abyss of the turnaround," citing the lack of guidance and investor day catalysts. 

"Early signs of market traction look positive, but can’t translate into hard numbers yet while markdown actions continue to drag down sales and margins," analysts said.

"Though we remain positive long-term, we expect the stock to stay in limbo short-term without a guidance clearing event or Investor Day catalyst."

Separately, Stifel analysts said they agree with Nike management's comments that a turnaround of this magnitude takes time. However, the stock's recent price action "seemingly speculates otherwise," they added.

"With a new CEO assuming the role in two weeks, we expect a return to growth sufficient to justify the high-twenties forward price-to-earnings (P/E) multiple unlikely until 1HCY26 (first half of the 2026 calendar year) at the earliest."

"Absent improved visibility to revenue inflection, we can’t support an upside case from current share levels and remain comfortable at HOLD," Stifel's team said. 

Yasin Ebrahim contributed to this report. 

Source: Investing.com