Fiery Flash: Nike Beats Earnings but Withdraws Full-Year Guidance

 

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Nike reported its fiscal 2025 first-quarter results, showing an earnings beat but falling short on revenue expectations. The company continues to struggle with declining sales amid rising competition, and its stock fell sharply following the announcement. 

 

Key Financial Highlights

• Earnings: 70 dollarcents per share, surpassing expectations of 52 dollarcents. 
• Revenue: $11.6 billion, slightly below the expected $11.64 billion.
• Nike Direct Sales: Dropped 13%, driven by a 20% decline in digital sales.
• Wholesale Revenue: Fell 8% to $6.4 billion.
• Nike Brand Sales: Declined 10% to $11.1 billion, with Converse sales down 15%.
• Regional Sales: North America saw an 11% decline, and China’s sales fell by 3%.

 

No Full-Year Guidance

Nike’s CFO, Matthew Friend, announced that the company is withdrawing its full-year 2025 guidance due to ongoing transitions. Instead, Nike will focus on providing quarterly outlooks. For the second quarter, the company expects an 8%-10% decline in revenue.

Looking ahead, Nike forecasts double-digit declines for its men's and women's lifestyle, Jordan brand, and digital businesses for fiscal 2025. The company is also reducing its emphasis on popular product lines like Air Force 1 and Air Jordan 1 to maintain long-term market health.

 

Strategic Shifts and Innovation

Nike plans to rebalance product allocations to its highest-traffic channels, particularly wholesale, to bolster its franchise performance. The company is also focusing on innovation, especially in running shoes, where it saw growth during the quarter. Spring 2025 orders for footwear are expected to grow by double digits. 

 

Leadership Change

On October 14, Elliott Hill, a 32-year Nike veteran, will take over as CEO following the retirement of John Donahoe. Hill’s task will be to revive sales amid increased competition from brands like On Holding and Deckers' Hoka. The returning Nike veteran is the right person to mend wholesale relationship and bring Nike back to its roots. Undoubtedly, recovery will take time in a stagnant sneaker market, along with an environment of cautious consumer spending.