Nike reported a drop in profits Tuesday on sagging revenues as the sports giant cautioned that a turnaround from a rocky period would take time under a new CEO.
The athletics company's financials showed lower sales in every operating region, as its CFO pointed to lackluster store traffic in China and excess inventories in leading markets.
The state of inventories will "require us to be more promotional," Chief Financial Officer Matthew Friend said on a conference call with analysts.
Profits of $1.1 billion were down 28 percent in the quarter ending August 31 compared with the year-ago period.
Revenues fell 10 percent to $11.6 billion, with sales in North America down 11 percent and China down four percent.
Nike announced on September 19 that it named Elliott Hill as its next CEO to begin October 14. Hill had worked for Nike for 32 years before leaving the company in 2020.
The company has been under pressure from Wall Street, facing criticism over various issues, including its lack of product innovation and earlier strategic decisions to deemphasize wholesale sales.
"All told, we expect that the return to strong growth will take time," Friend said. "We believe that we have all the right building blocks, especially with Elliot (Hill) now leading us forward."
Major problems facing Nike have already been "diagnosed," said a note by Neil Saunders, analyst at GlobalData Retail.
"However, (Nike) simply isn't able to engineer quick solutions. The company is too big and cumbersome, and the issues too deeply ingrained, to enact a quick turnaround," Saunders said.
"This leaves Nike facing a year of poor performance with only a promise of better things to come."
Shares of Nike dropped 4.8 percent in after-hours trading.
