Nike shares witnessed a decline early Wednesday as the sportswear titan retracted its full-year guidance and postponed its investor day, a move prompted by the appointment of a new chief executive last month. Furthermore, the company's fiscal first-quarter results exhibited a year-over-year decline. Earlier in September, Nike, a leading name in athletic footwear and apparel, announced that John Donahoe would be retiring as CEO later this month, with former long-time company executive Elliott Hill stepping in as his successor.
In light of this CEO transition, Nike opted to withdraw its fiscal 2025 outlook while offering quarterly guidance for the remainder of the year, as stated by Chief Financial Officer Matthew Friend during a late Tuesday earnings call. "This provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends, and develop our plans to best position the business for fiscal 2026 and beyond," explained Friend on the call, aligning with insights from a Capital IQ transcript.
"Moreover, we have also elected to postpone our investor day, which was originally slated for November." In premarket activity, Nike shares fell by 5.1%. Previously, the company had projected a revenue decline by mid-single digits in fiscal 2025, with the first half expected to decrease in the high single digits, according to Friend's remarks made to analysts back in June.
He noted that there has been a moderation in Nike’s revenue expectations since the beginning of the year, attributing this to traffic trends on its digital channels, retail sales across the marketplace, and finalized order books for spring. "We continue to observe indications of a slight second-half improvement in revenue trends compared to our first half as we plan to introduce and scale innovation across the marketplace," Friend added during the latest call. For the three-month period ending in August, Nike reported earnings of $0.70 per share, a drop from $0.94 the previous year but surpassing the Capital IQ-polled consensus, which estimated earnings at $0.52.
Revenue fell by 10% on a year-over-year basis, landing at $11.59 billion, missing the Street's forecast of $11.65 billion. The Nike brand’s revenue dropped 10% to $11.11 billion, affected by declines in footwear and apparel. Sales in North America tumbled by 11%, while the regions of Europe, the Middle East, and Africa experienced a steep decline of 13%.
Revenue from China decreased by 4%, and in Asia Pacific and Latin America, it slipped 7%. "While first-quarter revenue closely aligned with our projections from 90 days ago, we observed lower unit sales than expected, which were somewhat offset by a higher average selling price," Friend noted. He also acknowledged that retail sales did not meet their targets, including those from wholesale partners, with rising marketplace inventories necessitating increased promotional efforts in the first quarter to drive conversions. Looking ahead to the second quarter, Nike estimates that revenue will decrease by 8% to 10%, according to Friend.
He also forecasted a gross margin decline of about 150 basis points due to heightened promotional activities, headwinds from channel mix, and supply chain challenges that outweighed the advantages from lower product costs and decreasing benefits from the company’s pricing strategies. Current Stock Price: $84.48, Change: -$4.65, Percent Change: -5.22.