An worker carries shoe containers on the Footlocker retail retailer within the Barton Creek Sq. Mall on August 28, 2024 in Austin, Texas.
Brandon Bell | Getty Pictures
Nike will report quarterly earnings Tuesday as buyers brace for an additional set of less-than-stellar outcomes. The corporate introduced in September that CEO John Donahoe could be stepping down.
This is what analysts expect from the world’s largest sneaker firm for its fiscal first quarter of 2025, in line with consensus estimates from LSEG:
- Earnings per share: 52 cents
- Income: $11.65 billion
Analysts expect gross sales to drop 10% from the year-ago interval and earnings to plunge by practically 45%.
The grim outlook comes amid a reset at Nike. Over the past 12 months, it has been accused of falling behind on innovation and ceding share to opponents because it centered on promoting on to shoppers by way of its personal web sites and shops reasonably than by way of wholesalers comparable to Foot Locker and DSW.
In September, Nike introduced that Donahoe could be stepping down and would get replaced by firm veteran Elliott Hill, who’s scheduled to take the helm Oct. 14.
Beneath Donahoe’s management, the corporate grew annual gross sales by greater than 31%, however it acquired there by churning out legacy franchises comparable to Air Power 1s, Dunks and Air Jordan 1s — not the groundbreaking types that turned the corporate into a worldwide powerhouse.
Over the previous few quarters, Donahoe has spoken about the necessity to enhance innovation and mend Nike’s relationships with wholesalers, however the firm’s board determined that Hill, who spent 32 years with Nike earlier than retiring in 2020, could be the precise particular person to guide its subsequent chapter.
Donahoe is predicted to be current throughout the firm’s convention name with buyers Tuesday afternoon, however observers will likely be eager to see if there are any clues into the place the corporate is planning to go beneath Hill’s management.
The incoming CEO might want to energy up Nike’s innovation pipeline, reset its relationships with wholesalers and enhance morale after a sequence of layoffs and a breakdown in tradition.
Total, the sneaker market has been comparatively stagnant within the U.S. Shopper spending on discretionary items comparable to new garments and footwear has been sluggish, which has made Nike’s scenario that rather more troublesome.
Footwear gross sales within the U.S. are projected to develop by simply 2% in 2024 in contrast with 2023 after barely budging between 2022 and 2023, in line with Euromonitor. Athletic footwear is predicted to develop by about 5.6%, the agency mentioned.
Nike’s efficiency has additionally been weighed down by the uneven financial system in China, Nike’s third-largest market by income, which will likely be one other key merchandise to observe for within the earnings report. Nike’s efficiency in China is commonly an indicator of the area’s monetary well being, and in late June, it warned of a “softer outlook” within the area. Nonetheless, China’s central financial institution just lately unveiled its largest stimulus measures for the reason that Covid pandemic, which is predicted to offer the area’s financial system a much-needed increase.
Nike’s fiscal first quarter would have concluded previous to these stimulus measures, however executives might share shade on how gross sales are performing throughout the present interval.
Shares of Nike closed at $88.40 on Monday, down about 19% to date in 2024, considerably underperforming the S&P 500’s positive factors of about 21%.
