By (Reuters) – Nike (NYSE:NKE) shares dropped about 6% in premarket trading on Wednesday after the company withdrew its annual revenue target, keeping investors guessing on the timeline for a turnaround at the sportswear giant under incoming CEO Elliott Hill.
The company on Tuesday also postponed its investor day that was scheduled for Nov. 19 and CFO Matthew Friend said that pulling the outlook would give Hill “much-needed flexibility to evaluate Nike’s strategies and business trends.”
“I think just how quickly a turnaround can happen is up in the air … There’s not anything really that I could say at this point gives us a definite timeline or early hints to what is in store for the future,” said Jessica Ramirez, senior analyst at Jane Hali & Associates.
Last month, Nike named veteran executive Hill as CEO succeeding John Donahoe, under whom the company has seen demand peter out as competitors including On Holding and Hoka gained market share, especially in high performance and innovative running shoes categories.
Hill is set to take over on Oct. 14 and ahead of the postponement announcement investors were pinning hopes on the analyst day in November for clarity on Nike’s turnaround strategy.
“These next few months as we go into year end, (Nike is) going to leave investors with a lot more questions than answers and we didn’t get any answers,” said Jay Woods, chief global strategist at investment banking firm Freedom Capital Markets.
The Air Jordan sneaker parent on Tuesday said it had to offer higher promotions to help drive sales in the quarter and signaled a weaker holiday quarter as well.
“Nike is deep in the abyss of the turnaround,” Bernstein Societe Generale (OTC:SCGLY) analysts wrote in a note.
“Early signs of market traction look positive, but can’t translate into hard numbers yet while mark down actions continue to drag down sales and margins.”
Nike’s forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 27.98, compared with 27.08 for Deckers and 35.14 for Adidas (OTC:ADDYY).
