Nike Q1 Earnings

NIKE

Nike released its Q1 FY2025 earnings today (10/1), which highlights the company's ongoing financial challenges amid a transition in leadership.

For the first fiscal quarter, Nike reported earnings of 70 cents per share, surpassing analysts’ expectations of 52 cents. Despite this earnings beat, the company faced a 28% decline in net income, dropping from $1.45 billion a year ago to $1.05 billion. Revenue also fell 10% year-over-year to $11.59 billion, slightly missing Wall Street’s projection of $11.65 billion.

Nike’s gross margin improved by 1.2 percentage points to 45.4%, higher than anticipated, thanks to lower production costs and price increases. However, the company's sales suffered as both its direct-to-consumer and wholesale segments faced declines. Direct-to-consumer sales fell 13% to $4.7 billion, and wholesale revenue dropped 8% to $6.4 billion.

The company has been dealing with a slowdown in consumer spending, particularly in its North American market, where footwear sales fell by 14% and apparel sales declined 10%. Furthermore, Nike’s online sales for key franchises like Air Force 1s, Dunks, and Air Jordan 1s plummeted nearly 50%, signaling that its once-popular styles are losing steam.

Looking ahead, Nike expects revenue for the next quarter to decline by 8% to 10%, which is worse than analysts’ estimates of a 7% drop. Gross margins are also projected to decrease by 1.5 percentage points due to increased markdowns.

While Nike beat earnings expectations, its lower revenue and the withdrawal of full-year guidance caused its stock to drop 5% in extended trading. The company has postponed its investor day, originally scheduled for November, further reflecting the uncertainty surrounding its future strategy.