Nike Takes Big Risk With Holiday Discounts

During one of the busiest shopping weekends of the year, Nike was the only brand to have a 30% discount on most of its footwear at Macy's famous Herald Square location in New York City. Nike is in a race for cash.

- INTI PACHECO

Chief Executive Officer Elliott Hill said after he took over in October that his priority was clearing out the company's inventory. The company is slashing prices on its website so aggressively that it is not only risking its own holiday sales but also weighing on its retail partners.

The sneaker giant Thursday reported its third consecutive quarterly sales decline-a 9% drop in currency-neutral revenue from a year earlier. Its profit fell 10% in the quarter ended Nov. 30 from the yearearlier period.

Hill, a Nike veteran who returned to lead a comeback, shared details Thursday on his plan. The company is investing more in marketing, mending relationships with retail partners and returning its focus to sports, he said. Executives warned that some of these moves could hurt Nike's financial results in the short term. They warned that Nike's revenue could decline in the current quarter by more than 10% and that the drop could be even steeper in the following quarter.

"This isn't going to be easy, but we're ready for the challenge," Hill said Thursday on a call with analysts.

The cleanup has already made a dent on the results of some of Nike's large partners. A pair of Dunk sneakers sells for $115 at Dick's Sporting Goods or Foot Locker, but shoppers can discount-driven get the same shoes for $85 on Nike's website.