An employee is seen carrying shoe boxes at a Footlocker retail store in Barton Creek Square Mall, Austin, Texas, on August 28, 2024, as captured by Brandon Bell of Getty Images.
Nike is set to report its quarterly earnings on Tuesday, with investors anticipating another round of disappointing results. The company recently announced that its CEO, John Donahoe, would be stepping down.
For the fiscal first quarter of 2025, analysts, based on consensus estimates from LSEG, expect the following from the global sneaker giant:
– Earnings per share: 52 cents
– Revenue: $11.65 billion
Analysts are predicting a 10% decline in sales from the same period last year, accompanied by a nearly 45% plunge in profits.
This concerning outlook arises amidst a period of reorganization at Nike. Over the past year, the company has faced criticism for lagging in innovation and losing market share to competitors. Nike has focused more on direct-to-consumer sales through its own websites and stores rather than maintaining sales through wholesalers like Foot Locker and DSW.
In September, it was announced that Donahoe would step down, with Elliott Hill—a longtime company veteran—scheduled to assume leadership on October 14.
During Donahoe’s tenure, Nike’s annual sales grew by over 31%, achieved by leveraging legacy franchises such as Air Force 1s, Dunks, and Air Jordan 1s, rather than introducing groundbreaking new styles. Recently, Donahoe has acknowledged the need for innovation and repairing relationships with wholesalers. However, the board believes Hill, who spent 32 years at Nike before retiring in 2020, is best suited to lead the company’s next chapter.
Donahoe is expected to participate in the company’s conference call with investors on Tuesday afternoon. Observers will be keen on any insights about Nike’s strategic direction under Hill’s leadership. Hill faces the challenge of revitalizing Nike’s innovation pipeline, resetting its wholesaler relationships, and improving company morale after recent layoffs and cultural issues.
The broader sneaker market in the U.S. remains relatively stagnant, exacerbating Nike’s difficulties. Consumer spending on discretionary items like clothing and shoes has been weak. According to Euromonitor, footwear sales in the U.S. are projected to grow by just 2% this year compared to last year, with athletic footwear expected to grow by about 5.6%.
Nike’s performance has also suffered due to the uneven economy in China, its third-largest revenue market. This will be a key focus in the upcoming earnings report. Nike’s performance in China often reflects the region’s financial health, and in late June, the company warned of a “softer outlook.” However, China’s central bank has recently introduced its most significant stimulus measures since the Covid pandemic, likely to boost the region’s economy.
Nike’s fiscal first quarter concluded before these stimulus measures. Still, executives might provide insights on current sales performance.
Nike’s shares closed at $88.40 on Monday, down approximately 19% for the year, significantly underperforming the S&P 500’s gains of around 21%.
