• Loading stock data...
Tuesday, September 16, 2025

‘Stubbornly High’ Inventory Slowing New Nike CEO’s Turnaround Mission

In Elliott Hill’s first quarter as CEO, the sportswear giant said revenue came in at $12.4 billion, an 8% drop from the year-ago period but stronger than expectations.

Jun 20, 2024; Eugene, OR, USA; Detailed view of Nike Alphafly 3 racing flat at the Nike by Eugene store.
Kirby Lee-USA TODAY Sports

Nike reported a drop in revenues in its fiscal 2025 second quarter, the company’s first since Elliott Hill formally took the CEO job in October. The sportswear giant said revenue came in at $12.4 billion, an 8% drop from the same period ago, but higher than last quarter.

Analysts have been closely watching the sneaker giant for even faint signs of a turnaround as Nike has been battling fading demand for once-high-performing product lines like Air Force 1s, Air Jordan 1s, and Dunks, and rising competition from upstarts Hoka and On.

Analysts estimated revenue of $12.18 billion (about 9% lower than the year-ago period), and 64 cents in earnings per share. The stock rose nearly 8% in after-hours trading, with investors likely pleased results were slightly better than what analysts forecast.

The fiscal second covers the three-month period ending Nov. 30; Hill officially took the helm in mid-October.

Direct-to-consumer sales were also lower in the quarter: down 13% to $5 billion. Gross margin dropped to 43.6%, “primarily due to higher discounts and changes in channel mix, partially offset by lower product input costs as well as lower warehousing and logistics cost,” the company said.

“We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I’m confident you will see more moments of Nike being Nike again,” Hill said in the earnings statement. CFO Matthew Friend said the company is making “progress in shifting our portfolio.”

Standing immediately in the way of any Nike resurgence is its continuing need to reduce the presence of some of its popular franchises Dunk and Air Force 1s are “still in the thick of clearance,” with the third wave of discounts “picking up into holidays as inventory remains stubbornly high, not helped by an endless flow of new Dunk colorways launching,” according to Bernstein analysts.

Nike has been working to clear out stale inventory of these three franchises—including hefty discounts at the wholesale and retail levels—before the company introduces new products. The lack of compelling new and innovative products has dogged Nike in the past several quarters; previous CEO John Donahoe conceded the need to build “a robust pipeline of innovation” earlier this year.

On the earnings call following the earnings release, Hill said traffic in Nike’s direct-to-consumer channels have softened, with the result being “we’ve become far too promotional,” adding that “our digital platforms are delivering a 50-50 split of promotional sales with a level of markdown that affects the brand, disrupts the overall marketplace.” Hill said Nike will return to be a “premium destination.”

Of particular interest to analysts is what Hill says about the strategy to return Nike to growth and how long it will take, the product innovation pipeline and what changes might come to the company’s distribution strategy.

“Where are we in the product clearance journey? When do we reach the inflection point when stale product is cleared and new launches can start building brand heat?” Bernstein retail analyst Aneesha Sherman wrote in a recent note. 

Investors want to see old products cleared out as well as new products coming into the mix “to generate brand heat,” Sherman wrote. But based on its Q2 earnings, the process is far from finished.

China is another area of concern: The Beaverton, Ore., retailer reported an 11% drop in revenue (coming from footwear, apparel, and equipment) from greater China. Nike still ranks near the top among all brands for quality and performance among Chinese consumers, but its long dominance is waning as local brands gain ground and smaller brands like On spark demand. 

Meaningful change will take a few quarters. Cristina Fernández, retail analyst at Telsey Advisory Group, expected the brand’s lifestyle category of footwear to be the weakest; she also expected guidance for the third quarter to be soft, with sales down 9% year over year and declining gross margin. 

The results come at a time of flux for Nike’s relationship with retailers that carry its products. 

Foot Locker reported a sales and earnings miss in the third quarter this month, in part driven by a weaker consumer and too much discounting, which can dilute brand value. And on a call with analysts, an executive noted that among other challenges, the chain was “contending with some more recent softness” from Nike, its largest brand partner, which also impacted results.

In October Nike reported a 10% drop in revenue for its fiscal first-quarter, in line with estimates it provided last quarter. Revenues came in at $11.6 billion.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Pitaro: ESPN, MLB Making Progress on New Deal Talks

The network and league ended their deal earlier this year.
Charles Barkley

Charles Barkley Says TNT Sports ‘Just Sucks.’ Its CEO Doesn’t Mind

Barkley recently criticized TNT’s handling of “Inside the NBA.”
Greg Olsen

Greg Olsen on Tom Brady’s Raiders Role: ‘More Power to Him’

This season, the NFL has relaxed the special Brady broadcasting rules.
Kawhi Leonard

A Timeline of the Kawhi Leonard-Clippers-Aspiration Saga

Investigations into the Clippers’ business dealings with Leonard date back years.

Featured Today

Premier Lacrosse League

‘The Circus Is Coming to Town’: Why Upstart Leagues Start on Tour

In their ambitious plans, a traveling schedule is only temporary.
PHILADELPHIA, PENNSYLVANIA - APRIL 19: A detailed view of the MLB Debut patch on the jersey of Patrick Monteverde #44 of the Miami Marlins prior to game against the Philadelphia Phillies at Citizens Bank Park on April 19, 2025 in Philadelphia, Pennsylvania.
September 13, 2025

The Tiny Jersey Patch at the Center of the MLB Rookie Card..

Autographed cards containing a piece of baseball history have upended the market.
September 11, 2025

Eagles-Chiefs Super Bowl Rematch Could Set More NFL Ratings Records

Fox will nationally televise Sunday afternoon’s matchup.
September 10, 2025

ESPN’s ‘MNF’ Ratings Up 8% As NFL Surges to Strong Start

ESPN posts its second-best Week 1 “Monday Night Football” audience.

‘We Have Pricing Power’: On Smashes Earnings Expectations

U.S. tariffs haven’t cooled demand for On’s high-priced sneakers and apparel.
Happy Gilmore 2 hockey stick putter
July 21, 2025

Callaway’s $500 ‘Happy Gilmore’ Putter Booming on Resale Market

Callaway released a limited-edition Odyssey-branded hockey stick putter.
Limited Hype
July 27, 2025

Sneaker Reselling Was Once Easy Money. Success Is Now Complicated

Vendors need to evolve what they’re selling and how they do it.
Sponsored

How World Series Champ Dexter Fowler Became a Premier League Team Owner

Dexter Fowler discusses navigating retirement and embracing new roles as an owner & investor.
A Lululemon store at Freehold Raceway Mall in Freehold Township, New Jersey on Nov. 30, 2023
July 2, 2025

Sportswear Stocks Rise as Trump Touts Vietnam Trade Deal

Tariffs on Vietnam imports will be 20%, down from a prior threat of 46%.
From vintage to unique collaborations, various Nike and Jordan shoes are displayed on a wall at Saved Soles inside West Ridge Mall.
June 26, 2025

Nike Stumbles Less Than Expected, Giving Wall Street Hope

The sports apparel and footwear giant beats Wall Street expectations.
Jun 20, 2024; Eugene, OR, USA; Detailed view of Nike Alphafly 3 racing flat at the Nike by Eugene store.
June 25, 2025

Investors Hunt for Signs Nike Has Regained Its Footing

Nike’s fundamentals are “still challenged.”
Jun 15, 2025; Oakmont, Pennsylvania, USA; JJ Spaun putts on the 18th green to win during the final round of the U.S. Open golf tournament.
June 16, 2025

‘Pandemonium’: Putter Maker Sees Sales Surge After JJ Spaun’s U.S. Open Win

The company behind Spaun’s putter is already in talks with his people.