(Reuters) – Nike pulled its annual revenue forecast on Tuesday and missed quarterly revenue estimates as the sportswear giant battles weak demand for shoes amid intense competition from newer brands globally, sending its shares down 6% after hours.
It had previously forecast a mid-range percentage decline in annual revenue.
The company is yet to see sales benefits from its drive for rapid innovation with the launch of new product lines such as the Air Max Dn and Pegasus 41 to revive demand.
Analysts say too Nike (NYSE:) has done little to stimulate demand and regain market share from brands like Deckers’ Hoka and Roger Federer-supported On mainly in the US and Europe.
The sportswear giant was hit by a decline in consumer spending in China, which led to a 3% decline in the Greater China region. Sales in the United States and Europe fell by 14% each.
The company’s net revenue in the first quarter fell 10.4% to $11.59 billion. Analysts had expected a 10% decline to $11.65 billion, according to analyst estimates compiled by LSEG.
However, Nike reported a 120 basis point jump in gross margins to 45.4% as it attempts to cut costs through layoffs and reducing supply of some underperforming products.
First-quarter earnings per share of 70 cents also beat estimates of 52 cents, according to analyst data compiled by LSEG.
Nike said in September that company veteran Elliott Hill, who worked at Nike for 32 years before retiring in 2020, will take over as the new CEO on October 14, tasked with reviving sales growth and regaining market share.
With Hill at the helm, analysts expect Nike to start from scratch and rebuild wholesale partnerships that declined under outgoing CEO John Donahue.
Donahue has instead focused on boosting sales through the company’s stores and website, as he likes to US retailers Foot locker (NYSE:) and Dicks Sporting Goods quickly filled the shelf space vacated by Nike with trendy competitors like On, Hoka, and New Balance.
Nike said on Tuesday that it had postponed its investor day, which was previously scheduled for November 19.
“I’m very disappointed with the revenue number here… This is not a great report at all by any means quantitatively, but also qualitatively to cancel Investor Day,” said Dave Wagner, chief investment officer. Shares in Aptus Capital Advisors, which has a stake in Nike.