In adversity, changing leadership and withdrawing performance guidance, starbucks and nike, the two American consumer giants, adopted the same strategy: first release all the bad news in order to rebuild from a low starting point.

Local time on Tuesday, starbucks released preliminary fourth-quarter results a week early, with profits and sales falling short of expectations, and announced the suspension of full-year 2025 performance guidance to give new CEO Brian Niccol enough time to evaluate the business and solidify key strategies. This news caused starbucks' stock price to drop as much as 7% in after-hours trading on Tuesday, with a slight rebound on Wednesday.

Earlier this month, nike also withdrew its full-year performance guidance after falling short of revenue expectations, leading to a significant drop in its stock price after hours. Nike also postponed its Investor Day scheduled for November, allowing new CEO Elliott Hill, who took office in mid-October, time to develop strategies.

Both companies adopted a financial strategy known as the 'Kitchen-sink' approach, where all possible negative information and losses are disclosed at once for a period of time to present better performance in future financial reports. This is somewhat similar to the purpose of the practice of 'financial cleansing' by A-share listed companies.

Compared to persisting with unrealistic goals, disappointing investors with each miss, suspending guidance and replacing them with achievable targets is considered wise.

Consumer giants in distress need time for transformation.

Starbucks' suspension of performance guidance means giving up the aggressive targets Howard Schultz set two years ago - to increase global same-store sales by 7% to 9% by 2025, and to grow earnings by 15% to 20% annually during the same period.

The goal is ambitious, but the reality is harsh. Starbucks' quarterly same-store sales as of September 29 fell by 7%, and it is almost certain that it will not achieve the above-mentioned growth target.

Compared to the previous CEO Laxman Narasimhan's stubborn adherence to Schultz's goals, which were forced to be lowered multiple times, the approach of the new CEO Niccol is considered wise.

On Tuesday, Niccol outlined in a video many areas that the company needs to improve, including simplifying the coffee shop's 'overly complex menu', changing its marketing strategy, improving mobile orders, redesigning stores to 'look and feel like community coffee houses', and overall refocusing on coffee.

Analysis points out that Starbucks' actions remind the market of a harsh reality: large-scale transformation takes time. William Blair analyst Sharon Zackfia said that while still optimistic, under Niccol's leadership, Starbucks may gradually return to positive growth in the 2025 fiscal year, but profitability recovery may take until the 2026 fiscal year.

Also facing performance challenges is Nike. In June this year, Nike lowered its profit guidance, triggering a sharp reaction in the capital markets, with the stock price plummeting nearly 20% in one day. In the market environment where emerging brands are constantly emerging and consumer preferences are changing rapidly, Nike has not been able to adapt to these changes in a timely manner.

Jefferies Financial analyst Randal Konik wrote in a report on Wednesday that Starbucks' example serves as a warning to Nike investors: companies under performance pressure take time to repair when a new CEO takes office.

Like Starbucks, Nike has a lot to fix before sales significantly improve, and the changing market conditions of the past decade will not make things easy... We expect the future road to be full of challenges, and believe that the transformation will take longer than the market expects.

Editor/Lambor