Nike kicked off first-quarter results for fiscal 2025 late Tuesday with an earnings beat, but revenue missed estimates. The Dow Jones athletic shoe and apparel giant in mid-September named a new CEO amid rising competition and slowing sales growth. Nike stock tumbled Wednesday, adding to its sharp decline in 2024.
Nike on Tuesday reported earnings of 70 cents per share on $11.6 billion in revenue. FactSet expected earnings to drop nearly 45% to 52 cents per share on a 10% sales decline to $11.64 billion.
Nike Direct revenue fell 13% to $4.7 billion, driven by a 20% decrease in Nike brand digital sales. Wholesale revenues declined 8% to $6.4 billion.
Nike brand revenue dropped 10% to $11.1 billion. Converse sales were down 15% to $501 million, with declines across all territories.
Nike reported an 11% decline in North America revenue. Softness continues to persist in China, with overall sales down 3% for the quarter.
During the earnings call, CFO Matthew Friend said the Dow retailer is withdrawing its full-year 2025 guidance due to its transitional period and also postponed its investor day presentation. Instead, Nike will release quarterly outlooks.
The company expects Q2 revenues down 8% to 10%.
Nike forecasts its men and women's lifestyle, Jordan brand and Nike Digital businesses to all decline in double digits for fiscal 2025.
Nike is also reducing its emphasis on its Air Force 1, Air Jordan 1 and Dunk franchises. The retailer expects sales deceleration for those lines to continue as it tightens market supply, which will temper revenue over the coming seasons. Looking ahead, Nike also plans to rebalance product allocations to its highest traffic channels, such as wholesale, to maximize franchise health.
Going forward, Nike is ramping up product innovation, particularly for running shoes. During the quarter, the Dow retailer saw growth in its men's fitness, men's global football (soccer) and men's and women's running footwear. Nike also noted that its order book for spring 2025 footwear is set to grow double-digits from last year.
Nike's New CEO
Nike on Sept. 19 appointed Elliott Hill, a 32-year veteran of the company, to return to serve as CEO and a board member starting Oct. 14. The board and current CEO John Donahoe decided Donahoe will retire from his role on Oct. 13, but remain as an advisor through Jan. 31. Hill started his Nike career as an intern sales associate and climbed the corporate ladder, going on to senior leadership positions across Europe and North America. Prior to Hill's retirement in 2020, he served as President, Consumer and Marketplace, where he led all commercial and marketing operations for the Nike and Jordan brands.
In his new role, Hill will be tasked with reviving sales while battling rising competition from the likes of On Holding and Deckers' Hoka brand.
Nike had sought to pare costs and fatten margins by pushing direct-to-consumer sales and cutting back on wholesale channels. But that opened up space in stores for On, Hoka and others, surrendering Nike's market share. While Nike is trying to bolster the wholesale business, the upstart rivals have a foothold.
Analysts widely praised the return of the veteran Hill, with Baird, Wells Fargo and Evercore all raising their price targets on NKE stock following the announcement.
Shares leapt nearly 7% on Sept. 20 following the news.
Nike Stock Action
Nike stock sliced 6.8% lower Wednesday.
The stock rose 0.8% during regular trade on Tuesday. NKE shares have climbed off four-year lows set in early August but are trading below their 200-day moving average.
A strong move above that technical line could break a downtrend stretching back to December, but Nike has a long way to go.
Nike stock has fallen 23.5% so far this year, making it one of the worst performers in the Dow Jones Industrial Average.
Meanwhile, On Holding stock is extended above a buy zone for a consolidation after breaking out in late August. ONON stock vaulted more than 82% in 2024.
Deckers stock is up about 41.5% this year and is consolidating below a 184.48 buy point. It has an early entry just above 163.
Shoemaker Steve Madden is in range after breaking above a 47.24 buy point on Sept. 18. SHOO stock jumped almost 17% in 2024.
Wolverine World Wide has vaulted nearly 93% this year and is extended above a cup-base buy zone after its Sept. 17 breakout.
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