Beaverton, Oregon – Nike (NKE) stock took a hit, dropping approximately 5% in after-hours trading on Tuesday. This decline came after the company reported fiscal first quarter revenue that fell short of estimates and decided to withdraw its outlook for the year due to a CEO transition. The sneaker giant announced first quarter earnings per share of $0.70, surpassing Wall Street’s estimate of $0.52 but marking a 26% decrease from the previous year. Nike’s revenue of $11.59 billion also missed analyst estimates of $11.65 billion and reflected a 10% decline from the year before.
Sales at Nike suffered in both its direct-to-consumer business and its wholesale division. Direct revenues totaled $4.7 billion, down 13% from the same quarter in the prior year, while wholesale revenues amounted to $6.4 billion, an 8% decrease from the same period. Despite “some early wins,” Nike’s CFO Matthew Friend acknowledged on the earnings call that a significant turnaround will take time.
Morningstar equity analyst David Swartz mentioned that Nike’s quarter results were not surprising given the warnings the company had given late last year about the challenging sportswear market and innovation cycle for the beginning of fiscal year 2025. The lack of new products and a pullback on certain items have further contributed to Nike’s current situation.
The recent CEO change at Nike, where Elliott Hill will assume the role on October 14, has impacted investor sentiment. The announcement of Hill’s appointment led to a temporary 10% increase in Nike’s stock value. Prior to the CEO change, Nike’s stock had already fallen over 25% due to concerns regarding slowing sales growth and competition from brands like On and Deckers’ Hoka.
Looking ahead, Nike anticipates a revenue decrease ranging from 8% to 10% for the current quarter, which is below Wall Street’s initial expectations. Friend attributed this adjustment to trends in traffic on Nike, digital retail sales, and final order books for the spring season. This quarter marks the sixth consecutive reporting period where Nike has shown single-digit revenue growth or worse.
Despite the challenges, Jefferies analyst Randal Konik believes that Hill may not significantly impact Nike’s performance until fiscal year 2026. This uncertainty has led Konik to suggest that Nike’s shares could remain range-bound for the foreseeable future. Nike also postponed its upcoming investor day without setting a new date for the event, adding to the uncertainty surrounding the company’s future performance.