Nike CEO John Donahoe under fire from Wall Street after Q424 report

Nike CEO John Donahoe appears to be on thin ice. 

The former top executive of eBay, who has been at the helm of Nike since January 2020, is starting to lose Wall Street’s confidence after the company capped off a lackluster fiscal year with more bad news. 

On Thursday, Nike warned that sales in its current quarter were expected to decline by a staggering 10% – far worse than the 3.2% drop LSEG had projected – after it posted its slowest annual sales gain in 14 years, excluding the Covid-19 pandemic. 

The company also said it expects fiscal 2025 sales to be down mid-single digits when it previously expected them to grow.

Shares of Nike plummeted 20% on Friday, on pace for their worst day of trading on record. The company’s market value last stood at around $114 billion.

As Wall Street digested the dismal outlook from the world’s largest sportswear company, at least six investment banks downgraded Nike’s stock. Analysts at Morgan Stanley and Stifel took it a step further, specifically calling the company’s management into question.

“The FY25 guide (the 5th downward consensus revision in 6 quarters), pushes prospects for growth inflection further into 2025 (perhaps FY4Q or spring ’25 at the earliest) asking investors to both underwrite success of not yet proven styles and look across an uncertain consumer discretionary backdrop into 2HCY24 until momentum could build again into 2HCY25,” wrote Stifel analyst Jim Duffy. “Management credibility is severely challenged and potential for C-level regime change adds further uncertainty.”

Since Donahoe took over as Nike’s top executive, its stock is down about 25%, as of intraday trading on Friday, significantly underperforming both the S&P 500 and the XRT – the retail-focused ETF – which saw gains of around 69% and 67% in that time period, respectively.

Nike finance chief Matt Friend on Thursday attributed the guidance cut to a host of factors. Some, like softness in China and challenging foreign exchange headwinds, are outside of Nike’s control, but others are problems it squarely created under Donahoe’s leadership. 

The company is expecting wholesale orders to be slow as it scales new styles, pulls back on classic franchises and works to repair its relationships with key retail partners after spending the last few years cutting them off in favor of a direct-selling strategy. 

At the same time, loyal customers who shop on Nike’s website are no longer springing for new pairs of Air Force 1s, Air Jordan 1s or Dunks, the company’s core franchises. Critics say the sneaker lines have dominated the retailer’s offerings for too long and turned customers away as they sought fresh styles and innovative designs from a slew of upstart competitors. 

That’s left Nike to win…