Beaverton, Oregon – Nike (NKE) stock took a hit of about 5% in premarket trading on Wednesday after the company reported lower-than-expected fiscal first-quarter revenue and withdrew its outlook for the year due to a CEO transition. The sports giant announced earnings per share of $0.70 for the first quarter, exceeding Wall Street’s estimate of $0.52 but marking a 26% drop from the previous year. Revenue came in at $11.59 billion, falling short of analysts’ expectations of $11.65 billion and reflecting a 10% decline from the same period last year.
Both Nike’s direct-to-consumer business and wholesale division saw a decline in sales, with direct revenues totaling $4.7 billion (down 13%) and wholesale revenues at $6.4 billion (down 8%) from a year ago. CFO Matthew Friend acknowledged that a full recovery will take time, with early wins but no clear turnaround yet.
Following the lackluster sales growth, Nike’s CEO John Donahoe will step down on Oct. 14, to be succeeded by retired Nike executive Elliott Hill. The news initially caused Nike stock to spike up to 10%, indicating investor optimism regarding the leadership change amidst a challenging market environment.
Analysts like Morningstar’s David Swartz had anticipated Nike’s struggles, citing warnings made by the company since late last year about the state of the sportswear market and their lack of new product innovation. With competitors like On (ONON) and Deckers’ (DECK) Hoka brand gaining ground, Nike faced increasing pressure to adapt.
Looking ahead, Nike expects a revenue decrease of 8% to 10% in the current quarter, below initial Wall Street estimates. The company’s string of disappointing revenue growth reports has raised concerns among investors, leading to a decline in stock value prior to the CEO transition announcement on Sept. 19.
Industry experts believe that Hill’s impact on Nike’s performance may not be felt until fiscal year 2026, contributing to uncertainty in the stock’s trajectory. Despite these challenges, Nike is working to navigate the competitive sportswear landscape and regain its footing in the market.
The postponement of Nike’s upcoming investor day and the company’s pattern of consecutive quarters with single-digit revenue growth underscore the ongoing challenges facing the brand. Analysts caution that shares may remain stagnant for the foreseeable future, as Nike works towards addressing market trends and customer demands in an evolving industry.