The Business of Fashion
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When Nike ousted chief executive John Donahoe earlier this month, there were reports of cheers and popped bottles of Prosecco at the company’s Beaverton headquarters. Those employees were celebrating the replacement of Donahoe with Nike veteran Elliott Hill, who is seen as a better cultural fit, having held numerous roles at the company over 30 years.
A more immediate reason to celebrate: Nike now gets a free pass on what are likely to be another bleak set of earnings on Tuesday. Analysts are anticipating a 10 percent drop in sales from the same period last year, reflecting the continued struggle to find a substitute for flagging sales of retro styles.
Hill won’t have much of a honeymoon before investors and those Prosecco-guzzling employees start expecting results. Nike could use this week’s earnings to buy him some time. In a note, Bernstein analysts predicted the company would lower forecasts for sales and profits in the second half of its fiscal year when it reports results this week. That way, Hill can soak in the accolades when he beats sub-basement-level expectations later this year.
We’re unlikely to get a true sense of what the Hill era looks like on Tuesday; he won’t even technically return to the company for another two weeks. Nike’s investor day in mid-November is a more likely venue for a grand strategy to emerge. Some Nike watchers are predicting the company will again stall for time, but it would be a missed opportunity to lay out a new vision, even if the details are scant.
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Turning back to this week, the key question is how bad things are going to get, and how much of the blame falls on Donahoe, as opposed to thornier structural issues that even a talented insider may struggle to resolve.
Meanwhile, in Paris
Paris Fashion Week continues, with Alessandro Michele’s debut at Valentino on Sunday (read Tim Blanks’ interview with the designer), Balenciaga on Monday and Chanel, Miu Miu and Louis Vuitton closing things out on Tuesday. They’ll all be competing for attention with Levi’s, which has been teasing a collaboration with Beyoncé that’s set to drop on Sept. 30, with the rollout including an event in Paris.
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