Elliott Hill Told Shareholders on September 8 That Nike Is "Building It for the Next Decade," and Three Weeks Later He Guided the Year Down
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Elliott Hill told shareholders on September 8 that Nike is "building it for the next decade," and three weeks later he guided the year down.
On October 1, Nike guided fiscal 2027 revenue down by a high-single-digit percentage. Adjusted EPS: $1.15 to $1.35, against about $1.66 expected. It announced Pace, a cost program targeting $2.5 billion of savings through fiscal 2031.
Hill calls part of that decline deliberate, less retro supply, and part product underperformance and marketplace pressure.
The stock fell 9% intraday on October 2, closed down 3.6%, and by October 7 was 2.2% below its October 1 close.
I read the recovery from that 9% drop as the market telling Hill it has already priced a shrinking Nike. The shares trade 58% below the level when Hill was named CEO in October 2024.
I think Pace is already in the price. So November 16 will turn on whether Running's growth can be repeated in Sportswear and Jordan.
Running grew double digits again in the August quarter. But Sportswear, just under half of revenue, fell low double digits. Jordan, 13% of revenue, fell mid-teens.
At Eagle Talon we score a turnaround CEO on three dimensions.
1. Fit to the challenge. Hill rebuilt Running. Whether he can repair Sportswear and Jordan is unproven.
2. Capital allocation. Pace's $2.5 billion comes before any reinvestment, and Nike has not said how much it will reinvest, or where.
3. Incentive design. Half of Hill's $15 million retention award pays on fiscal 2027 margin growth above fiscal 2026's 8.3%. So does CFO David Denton's $4 million award. Zero below an undisclosed target, double at maximum. Revenue that year is guided to fall.
The board is paying for margin while asking the market to wait for growth.
What would Hill have to show on November 16 for you to believe Sportswear can repeat what Running did?
🔗 Source: NIKE, Inc. Reports Fiscal 2027 First Quarter Results
