In the minds of Nike’s leaders, the recovery path is clear. Investors, however, are not convinced.
The athletic footwear and apparel giant reported a downbeat but largely expected set of earnings Tuesday for its fiscal first quarter—detailing a 10% revenue decline to $11.6 billion the company forecast back in July. Earnings beat analyst projections, reaching $1.05 billion, down 28% from the comparable period last year.
Offering a somewhat different vibe than the meager fourth-quarter earnings report three months ago that prompted a one-day, 20% drop in Nike stock, company CFO Matthew Friend said there have been some initial signs of optimism and “early wins” as the brand seeks to revive itself from a perceived lack of innovation, sharply heightened competition, and issues in its direct-to-consumer sales. Among those signs Nike cited were improved future orders of product in the running segment.
“Throughout our history, Nike has always faced pressure. Nike was born through adversity,” Friend said late Tuesday during an analyst call. “Today is no different. Adversity creates sharper focus, leading to innovation and new growth. We will continue to address the challenges head on.”
The earnings report marked the company’s first to the market since announcing plans to replace embattled CEO John Donahoe with Elliott Hill—an executive shift taking effect later this month and one that has energized many both inside and out of the company.
Rough Reaction
After investors first appeared relieved that nothing in the latest report was materially worse than what was previously forecast, they then sent Nike shares down about 5% in after-hours trading. The company’s stock, even after recent gains related to Hill’s appointment, remains down more than 16% this year. Full trading on Wednesday is likely to bring further turbulence.
Neither Hill nor Donahoe was on the analyst call, but Donahoe was thanked “for all he’s done to move Nike forward.”
Guidance on Guidance
Because of the forthcoming transition to Hill, Nike said Tuesday it is withdrawing its prior investor guidance for its fiscal year 2025, which previously forecasted a sales decline of 4% to 6%. Instead, the company will provide forecasts on a quarter-to-quarter basis. An investor day previously scheduled for November is also being postponed.
“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 ’26 and beyond,” Friend said.
Nike’s second-quarter revenue is projected to largely maintain the first-quarter trend, and again be down by 8% to 10%.
