An worker carries shoe bins on the Footlocker retail retailer within the Barton Creek Sq. Mall on August 28, 2024 in Austin, Texas.
Brandon Bell | Getty Photographs
Nike will report quarterly earnings Tuesday as traders brace for one more set of less-than-stellar outcomes. The corporate introduced in September that CEO John Donahoe could be stepping down.
Here is what analysts expect from the world’s largest sneaker firm for its fiscal first quarter of 2025, in keeping 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 income to plunge by practically 45%.
The grim outlook comes amid a reset at Nike. During the last yr, it has been accused of falling behind on innovation and ceding share to opponents because it targeted on promoting on to customers by its personal web sites and shops fairly than by wholesalers equivalent 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%, nevertheless it obtained there by churning out legacy franchises equivalent to Air Power 1s, Dunks and Air Jordan 1s — not the groundbreaking kinds 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 correct particular person to steer its subsequent chapter.
Donahoe is predicted to be current in the course of the firm’s convention name with traders Tuesday afternoon, however observers shall be eager to see if there are any clues into the place the corporate is planning to go below 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 collection of layoffs and a breakdown in tradition.
Total, the sneaker market has been comparatively stagnant within the U.S. Client spending on discretionary items equivalent to new garments and footwear has been sluggish, which has made Nike’s state of affairs 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 keeping with Euromonitor. Athletic footwear is predicted to develop by about 5.6%, the agency stated.
Nike’s efficiency has additionally been weighed down by the uneven financial system in China, Nike’s third-largest market by income, which shall be one other key merchandise to look at 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. Nevertheless, China’s central financial institution just lately unveiled its largest stimulus measures because the Covid pandemic, which is predicted to present the area’s financial system a much-needed enhance.
Nike’s fiscal first quarter would have concluded previous to these stimulus measures, however executives might share coloration on how gross sales are performing in the course of the present interval.
Shares of Nike closed at $88.40 on Monday, down about 19% up to now in 2024, considerably underperforming the S&P 500’s good points of about 21%.
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