Investors cheered last month when Nike announced the return of company veteran Elliott Hill, who is emerging from retirement to lead the Oregon shoe giant beginning Oct. 14. Shares sank roughly 5% Wednesday morning, however, after the company withdrew its full-year guidance and postponed its investor day indefinitely during Nike’s latest quarterly earnings call on Tuesday.

Analysts appear largely confident in Hill’s ability to spark a revival at Nike, which has lost some of its swagger amid toughening competition and flagging sales. Short-term, however, many also still see a stock in limbo.

“No CEO, no guidance, no investor day. Nike is deep in the abyss of the turnaround,” is how Bernstein analysts Aneesha Sherman and Jessica Tian opened a note to investors.

Nike slightly beat earnings expectations for the latest quarter even as sales declined 10% year over year, in line with Wall Street’s expectations. The company did cut revenue guidance for next quarter by 8% to 10%, however, which was slightly worse than expected.

Sherman and Tian said the forecast cut was the right move to reset expectations and give Hill some breathing room as he settles into the corner office. They would have preferred a similar cut for the first half of next year, they noted. Instead, withdrawing guidance entirely, they wrote, was akin to management offering a “complete black box, which will likely weaken confidence short-term.”

Nike shares hit an all-time high of $177.51 in November 2021 as Hill’s predecessor, the retiring John Donahoe, earned plaudits for deftly steering the company through the COVID-19 pandemic. Shares have dropped by more than 50% since, however, with the stock trading above the $84 mark as of late morning Wednesday.

Donahoe, hired to lead Nike into the digital age, pursued an ambitious direct-selling strategy that ruthlessly cut over half the company’s retail partners and limited the flow of kicks to vendors like Amazon, Zappos, and even Foot Locker. The company also focused on churning out legacy models, which initially boosted sales but undermined the innovator status key to the brand’s appeal to sneaker enthusiasts.

The shoe giant has quickly lost shelf space to legacy competitors like Adidas and Puma, as well as upstarts such as Brooks, Hoka, and On. Investors will look to Hill, who started at Nike as an intern in the 1980s, to restore the company’s long-celebrated culture and repair relationships with important partners.

“We think the fundamental reset ahead of Hill taking over as CEO later this month tempers the risk of a sales miss and gives Hill the flexibility to implement his strategy,” Bank of America’s Lorraine Hutchinson and Christopher Nardone wrote in a note.

How quickly can Hill lead a turnaround at Nike?

At Bernstein, Sherman and Tian also maintain an “outperform” (or “buy”) rating on the stock, but they noted management has so far provided few details on how the company’s strategy and timeline will change under Hill.

“And with the investor day postponed indefinitely, we don’t even know when we will know!” the two wrote.

Hutchinson and Nardone said they saw early signs of success for Nike in pushing forward new products, citing growth in both the men’s and women’s running segments as retailers place their orders for spring. While wholesale sales declined 7% year over year, they remained encouraged by recent investments in partners like Dick’s Sporting Goods and Foot Locker to focus on segments like women’s fitness and basketball, respectively.

Bernstein agreed those efforts pointed to an earnings acceleration in the first half of next year but noted the pace of that uptick will be slow. The recent message from Nike’s management, they wrote, has been that turnarounds take time.

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