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(Automated translation by Reuters, please see disclaimer

October 1 – ** Shares of Nike NKE.N rose 0.84% ​​to $89.14 on Tuesday, bucking the market’s slide, ahead of its scheduled quarterly earnings release after the closing bell

** Investors and analysts expect NKE to lower its annual sales forecast in first earnings report since Elliot Hill took the helm as chief executive earlier this month

** After a surprise drop in annual sales in June, analysts expect first-quarter revenue to fall 10% to $11.65 billion, the biggest decline in more than four years, and earnings per share fell 44.7% to 52 cents

**NKE faces increased competition from nimbler rivals such as Hoka de Deckers DECK.N and On

ONON.N, supported by Roger Federer.

**NKE has missed revenue in 3 of the last 8 quarters, including 3 of the last 4; When it comes to EPS, NKE has only missed revenue once, in Q4 2023

**42 analysts cover NKE, rating it an average of ‘BUY’ with a median PT of $94.50, according to LSEG data

**NKE options imply a 7.1% move for stocks, in either direction by Friday, according to Trade Alert data

**NKE is down about 18% year to date, compared with a gain of about 12% for the S&P 500 Consumer Discretionary Index .SPLRCD.

(Automated translation by Reuters, please see disclaimer by Ananya Mariam Rajesh and Nicholas P. Brown

Investors and analysts expect Nike NKE.N to lower its annual forecast on Tuesday when it reports quarterly results, the company’s first earnings report since announcing a new chief executive early of the month.

Elliott Hill, who spent 32 years at the sportswear giant before retiring in 2020, will become top boss again from October 14 to succeed John Donahoe, Nike announced on September 19.

Hill will have the daunting task of turning around a once-dominant brand that is now losing market share and has recently faced competition from smaller, more nimble rivals such as Deckers’ Hoka DECK.N and On ONON.N , backed by Roger Federer.

“This is going to be one of those quarters where they’re probably going to try to shake off all the bad news as much as they can now to get it over with and start fresh,” said Jay Woods, chief global strategist at the investment bank Freedom Capital Markets.

Woods said he expected investors to give Hill a “grace period” when he joined, but added: “The question is whether he can, with his experience and his connections deep with the iconic Nike brand, bringing back a little magic”

Four brokerages had reduced their price targets for Nike before the quarter, but after the company announced Mr. Hill’s new role, five brokerages raised their price targets.

Nike’s first-quarter revenue is expected to fall 10% to $11.65 billion, its biggest decline in more than four years, and earnings per share are expected to fall, according to analyst estimates compiled by LSEG. by 44.7% to settle at 52 cents.

In June, Nike forecast a surprise drop in annual sales , and some analysts expect it to revise those targets again on Tuesday.

Analysts have since revised their forecasts and on average expect the company to report a 5% decline in annual revenue for fiscal 2025.

“Analysts expect the company to lower its guidance, or remove its guidance for now, and give the incoming team a chance to review the business , to see what she thinks she can fix and how long it will take,” said Joseph Civello, an analyst at Truist Securities.

Nike shares have risen more than 10% since Mr. Hill was named chief executive, recouping some losses after the stock had its worst day in June.

Investors will also be attentive to the fallout from the Paris Olympic Games. Nike and Puma PUMG.DE managed to increase the number of visits to their direct-to-consumer sites during the opening week and convert them into a good percentage of sales, research firm Similarweb said in august.

THE INNOVATION PUZZLE

Nike has had to move forward some launches after losing ground to Hoka and On, whose trendy, more comfortable shoe lines are resonating with consumers.

“If you look at any retail brand, especially on the footwear side, it seems like the new entrants are kind of the most prestigious right now,” said Dave Wagner, head of equities at Aptus Capital Advisors, which has a stake in Nike.

“Nike has had to innovate more, but it is currently lagging behind

Over the past two quarters, Nike has unveiled new running and performance shoes, such as Air Max Dn and Pegasus 41, and announced plans to launch a new line of athletic shoes priced at $100 and under, in order to attract budget-conscious consumers. But these initiatives have not yet yielded major results.

In the meantime, the company has also relaunched some shoes with only minor changes, especially in color. According to Jessica Ramirez, principal analyst at Jane Hali & Associates, that’s not enough.

“I don’t think the second half will be good for Nike … until we see new products in the product line for 2025,” Ms. Ramirez said.

((Automated translation by Reuters, please see disclaimer

(Added earnings comparison in paragraph 10 and updated stocks) by Ananya Mariam Rajesh

On Holding ONON.N beat analysts’ estimates for second-quarter revenue on Tuesday on strong demand for its footwear and apparel from customers looking for fashionable products, but shares fell 9% premarket as the company maintained its full-year forecast.

The company cited low inventory due to capacity constraints and supply issues at its Atlanta distribution center, which is being automated.

“We experienced shipping delays, but also stockouts in our retail channel… While we had a record quarter, it could have been even stronger if we had not had these impacts,” Martin Hoffmann, co-CEO and CFO, told Reuters.

The forecast reflects the company’s expectation that disruptions will continue for months to come, he added.

The Roger Federer-backed company maintained its forecast of net sales growth of at least 30% for 2024.

U.S.-listed shares of On are up nearly 47% since the start of the year as the company and Hoka-owner Deckers Outdoor DECK.N leapfrog athletic apparel giant Nike NKE.N for shelf and online space at retailers including Dick’s Sporting Goods DKS.N and Foot Locker FL.N in the running shoe category.

We launched products in the running and trail categories, seeking to exploit the trend of customers willing to splurge on comfortable and new products, even if they remain cautious about major purchases.

“We see a lot of sales coming in at full price…it’s a business that makes sense in the long term,” Hoffmann said.

The company’s second-quarter sales rose nearly 28% to 567.7 million Swiss francs ($655 million), compared with LSEG’s estimate of 560.9 million Swiss francs.

Adjusted earnings of 0.15 Swiss francs per share narrowly missed estimates of 0.16 Swiss francs.

($1 = 0.8664 Swiss francs)

((Automated translation by Reuters, please see disclaimer by Dawn Chmielewski and Greg Bensinger

When Mike Hopkins was approached to lead Amazon AMZN.O Prime Video, his vision for the streaming service matched that widely held in Hollywood: It was nothing more than a perk for subscribers to the online retailer’s two-day delivery service.

But Amazon founder Jeff Bezos had much bigger ambitions for the service, which offers movies, TV shows and original programming.

“After meeting Jeff, it was clear that he saw an opportunity to build a media company,” said Hopkins, an entertainment industry veteran who has worked at Fox Networks, Sony Pictures and Hulu and who over the past four years has charted Prime Video’s path to becoming a major Hollywood player.

Under Mr. Hopkins, Prime Video is being reshaped into the mold of a traditional media company, with its own movie studio and theatrical distribution service, a growing slate of original films and series featuring A-list actors, a growing roster of professional sports and advertising.

“We appreciate the progress of Prime Video,” Amazon Chief Executive Andy Jassy told investors this month.

Prime Video’s stars — and live sports — are giving it a shot at capturing a bigger share of the $28.75 billion in digital ad revenue that Emarketer predicts will flow to streaming this year as marketers scale back their investments in traditional TV. Morgan Stanley estimates that Prime Video ads could generate $3.3 billion in revenue this year and more than double to $7.1 billion within two years.

Still, Prime Video lagged behind industry leaders YouTube and Netflix in terms of share of U.S. streaming TV viewing for the month of June, according to Nielsen’s metrics. And while more of its shows have entered Nielsen’s top 10 most-watched original series in 2023, Netflix remains dominant.

SPORTS, STARS AND ADVERTISEMENTS

Still, Amazon’s aspirations to create a one-stop entertainment destination that offers something for every taste are becoming clearer, according to nine entertainment industry agents, ad buyers and executives.

Prime Video has become the first streaming service to enter into an exclusive deal with the NBA, creating a year-round sports lineup that by 2025 will include NFL football, NASCAR auto racing, the WNBA Finals and Champions League soccer.

And to threaten traditional studios, Amazon plans to more than double the number of theatrical releases it releases, from six this year to 16 by 2027, Reuters can first report. That number doesn’t include films aimed at non-U.S. audiences, the five or six it typically acquires from other studios and the dozen or so it plans to distribute directly on Prime Video. That output would rival that of Hollywood’s most prolific studio, Universal Pictures.

Prime Video increased its spending by $1.7 billion to $13.6 billion this year as it bolsters its investment in professional sports and increases the volume of content production, according to estimates from market research firm Ampere ANALYSE, while other studios cut content spending.

Amazon’s talent roster includes more Hollywood A-listers, such as Reese Witherspoon, Jake Gyllenhaal and Octavia Spencer, as well as sports stars like tennis great Roger Federer. The company even struck a deal with former Netflix film chief Scott Stuber to revive the famed United Artists label within Amazon MGM Studios.

Prime Video now understands that it takes quality content and celebrities to attract advertisers,” said Jessica Brown, managing director of digital investments at media buyer GroupM. “Before, they had the reach and scale, but they didn’t have the content story.”

“You have to be culturally relevant,” she added.

Madison Avenue took notice when Prime Video began showing ads to its roughly 115 million U.S. viewers in January, instantly becoming the largest ad-supported subscription streaming service nationwide, according to Emarketer.

Advertising executives said that reach and the shopping information gleaned from Amazon’s online retail store offer a unique opportunity. Amazon can offer to instantly upsell consumers to products they see during commercial breaks.

“That’s now rippling through the market,” said Kevin Krim, chief executive of marketing analytics firm EDO, adding that the influx of new inventory could also drive down advertising prices for others.

ENTERTAIN EVERYONE

Amazon has struggled at times to get creative. Despite hits like “The Boys” — about vigilantes seeking to expose corrupt superheroes, which reached No. 1 in more than 165 countries when the fourth season debuted — it has also produced costly failures like “Citadel,” a thriller with lukewarm reviews that failed to crack Nielsen’s U.S. streaming ratings.

Hopkins says a creative team is looking for a program with broader appeal and global reach. The ideal Prime Video project has been described by talent agents as the equivalent of an airport novel, a story that is read in one sitting and commercial. It is Amazon’s answer to Netflix’s programming philosophy of offering a “gourmet cheeseburger” – well-executed, broadly popular entertainment.

“We want to be the number one show or movie for a lot of people,” said Hopkins, head of Prime Video and Amazon MGM Studios.

Amazon is focusing on four different audience segments — including men and women over 35 and under 35 — that it can serve with a reliable stream of content that is budgeted to reflect the size of the potential audience, Hopkins said. Projects that appeal to a broad audience will benefit from larger budgets than those that target a narrow audience, he added.

Agents say Amazon is looking for young adult programming such as “The Summer I Turned Pretty,” a teen romance; action and thriller series in the vein of “Tom Clancy’s Jack Ryan,” which appeal to men over 35; and female-driven stories such as “The Idea of ​​You,” which tells the love story between a single mother and a boy band lead singer and drew nearly 50 million viewers worldwide in its first two weeks.

“We don’t want to have a ‘Saltburn’ and then nothing else for this audience for six months,” Hopkins said in an interview, referring to Amazon MGM’s popular psychological thriller about an Oxford student’s run-ins with a classmate’s eccentric family.

Amazon continues to make big, calculated bets. The $150 million it spent to adapt the video game “Fallout” into a critically acclaimed series has become Prime Video’s second-most-watched series.

Instantly recognizable characters and stories are key because Amazon tends to attract viewers who are looking for specific shows, according to one agent who spoke on condition of anonymity to preserve his relationship with the company. “People don’t just hang out on Amazon like they do on Netflix,” he said.

It’s a far cry from Amazon’s first foray into streaming video, when it tried to get content from its customers at .

The transition was accelerated by Amazon’s $8.5 billion acquisition of MGM, the studio behind the James Bond and “Legally Blonde” franchises. The deal gave Amazon a treasure trove of intellectual property it can mine without engaging in costly bidding wars for sought-after projects, Hopkins said.

He added that Amazon wanted to avoid an “arms race”

“We decided that it would be more beneficial for us in the long term to own a studio with very good intellectual property and then develop our own projects,” Hopkins said.

The sports site is another essential pillar of Hopkins’ media strategy.

The final element of Mr Hopkins’ plan is to recreate “Prime without the shipping.” Amazon has amassed a vast library of content, including free, ad-supported TV channels, rival streaming services like Paramount+, and newly released movies to rent or buy, all accessible through the newly revamped Prime Video app.

“What we’re really trying to build is not just a single subscription service – I think we’ve proven that we can play a much broader game,” Hopkins said, adding that, as Chief Executive Jassy put it, “We’re on track to become a profitable business in our own right.”