An employee carries boxes of shoes at the Footlocker retail store at Barton Creek Square Mall on August 28, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Nike It will report its quarterly earnings on Tuesday as investors brace for another set of less-than-stellar results. The company announced in September that CEO John Donahue would step down.
Here's what analysts expect from the world's largest athletic footwear company for the fiscal first quarter of 2025, according to consensus estimates from LSEG:
Earnings per share: 52 cents Revenue: $11.65 billion
Analysts expect sales to decline by 10% compared to the same period last year and profits to decline by approximately 45%.
This bleak outlook comes amid Nike's reset. Over the past year, it has been accused of lagging innovation and ceding share to competitors as it focused on selling directly to consumers through its websites and stores rather than wholesalers such as Foot locker and DSW.
In September, Nike announced that Donahue would be stepping down and would be replaced by company veteran Elliott Hill, who is set to take the helm on October 14.
Under Donahue's leadership, the company's annual sales increased by more than 31%, but it got there by churning out legacy franchises like Air Force 1s, Dunks and Air Jordan 1s — not the pioneering styles that turned the company into a global powerhouse.
Over the past few quarters, Donahue has talked about the need to improve innovation and repair Nike's relationships with wholesalers, but the company's board decided that Hill, who spent 32 years with Nike before retiring in 2020, would be the right person to lead the company next. the chapter.
Donahue is expected to be present during the company's conference call with investors Tuesday afternoon, but observers will be keen to see if there are any clues about where the company plans to go under Hill's leadership.
The next CEO will need to bolster Nike's innovation pipeline, reset its relationships with wholesalers and improve morale after a series of layoffs and a collapse in culture.
Overall, the athletic shoe market was relatively stagnant in the United States and consumer spending on discretionary goods such as clothing and new shoes was sluggish, making Nike's situation more difficult.
US footwear sales are expected to grow just 2% in 2024 compared to 2023 after seeing a slight uptick between 2022 and 2023, according to Euromonitor. The company said that the sports shoe industry is expected to grow by about 5.6%.
Nike's performance was also affected by the uneven economy in China, Nike's third-largest market by revenue, which will be another key item to watch in the earnings report. Nike's performance in China is often an indicator of the region's financial health, and it warned in late June of a “softer outlook” in the region. However, China's central bank recently unveiled its biggest stimulus measures since the Covid pandemic, which is expected to give the region's economy a much-needed boost.
Nike's fiscal first quarter could have ended before those stimulus measures, but executives may share color on how sales have performed over the current period.
Nike shares closed at $88.40 on Monday, down about 19% so far in 2024, well below the S&P 500's gain of about 21%.
