Nike stock (NKE) fell about 7% Wednesday after the company reported lower-than-expected first-quarter sales and withdrew its guidance for the current fiscal year amid a CEO change.
The shoe giant reported first-quarter earnings of $0.70 per share, which beat Wall Street’s expectations of $0.52 and was down 26% from a year earlier. Meanwhile, Nike’s revenue was $11.59 billion, lower than analysts’ expectations of $11.65 billion and a 10% decline from the same period last year.
Nike experienced weak sales in both its direct-to-consumer business and its wholesale division. Nike Direct sales were $4.7 billion, down 13% year-over-year. Wholesale revenue was $6.4 billion, down 8% from the same period last year.
“Resurrections at this scale take time, and while there are some early wins, we haven’t turned the corner yet,” Nike Chief Financial Officer Matthew Friend said on an earnings call Tuesday night. .
Morningstar equity analyst David Swartz told Yahoo Finance that Nike’s report was “about what people expected.”
“Nike has been warning us since the end of last year, December of 2023, that the sportswear market is not doing very well and its innovation cycle is not particularly good going into the beginning of the 2025 fiscal year,” Swartz said. said. “Currently, Nike is not able to release many new products, and some other products have been withdrawn.”
This quarterly report is Nike’s first since announcing a CEO change amid sluggish sales growth. Former Nike executive Elliott Hill, who retired in 2020, will become CEO on October 14th, replacing John Donahoe. Nike stock initially rose as much as 10% on the news.
Nike Florida Gators Football Overview during the Florida Gators vs. Mississippi State Bulldogs game at Davis Wade Stadium in Starkville, Michigan on September 21, 2024 (Michael Wade/ Icon Sportswire via Getty Images) (Icon Sportswire via Getty Images)
Nike’s stock price has been depressed this year, due to concerns about slowing sales growth and pressure from emerging competitors in the space, such as ONON and DECK’s Hoka brand. It fell more than 25% before the announcement of a CEO change on September 19th.
“This sportswear industry is more competitive than it was five years ago,” Swartz said. “Donahoe didn’t realize that until it was a little too late.”
Friend said Nike expects sales to fall in the range of 8% to 10% this quarter, lower than Wall Street’s initial expectation of a 6.7% decline.
“Earnings expectations have moderated since the beginning of the year given Nike’s traffic trends, market-wide digital retail sales trends, and final spring orders,” Friend said.
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Tuesday’s print edition marked Nike’s sixth consecutive quarter of single-digit or lower sales growth. The company also announced on Tuesday that its upcoming investor day has been postponed, with no future date announced.
Jefferies analyst Randall Connick said in a note to clients Wednesday morning that the impact of a CEO change will likely take time and that Nike stock is “not out of the woods yet.”
“While I believe the new CEO is a step in the right direction, I would like them to acknowledge that they are not there yet,” Connick wrote. “Once we get to work, it takes time to deal with cross-currents such as stock losses, difficult consumer contexts, and changing fashion trends, all of which lead us to suspend our stock ownership. Masu.
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Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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