On August 28, 2024, an employee moved shoe boxes at the Footlocker retail store at Barton Creek Plaza Mall in Austin, Texas.
Brandon Bell | Getty Images
Nike The company will report quarterly earnings on Tuesday, and investors are in for another set of less-than-ideal results. The company announced last month that Chief Executive John Donahoe would resign.
Analysts expect the following for the world's largest athletic shoe company in its fiscal first quarter of 2025, according to LSEG's consensus forecast:
- Earnings per share: 52 cents
- income: US$11.65 billion
Analysts expect sales to be down 10% from a year ago and profits to be down nearly 45%.
The grim outlook comes as Nike undergoes a restructuring. Last year, the company was accused of lagging in innovation and losing share to rivals as it focused on selling products directly to consumers through its own website and stores rather than through channels like Foot cabinet and deep water shallow water area.
In September, Nike announced that Donahoe would resign and be replaced by company veteran Elliott Hill, who is scheduled to take over on October 14.
Under Donahoe, the company's annual sales grew by more than 31%, but it did so by launching traditional lines like the Air Force 1, Dunk and Air Jordan 1 rather than turning the company into a global behemoth. of groundbreaking styles.
Over the past few quarters, Donahoe has been talking about the need to improve innovation and repair relationships with wholesalers, but the company's board of directors decided that Hill, who spent 32 years at Nike before retiring in 2020, would be the best person to lead it. The right person for the next term of business.
Donahoe is expected to attend the company's conference call with investors on Tuesday afternoon, but observers will be eager to see if there are any clues as to where the company plans to go under Hill.
The incoming chief executive will need to bolster Nike's innovation pipeline, realign relationships with wholesalers and boost morale after a series of layoffs and a cultural breakdown.
Overall, the U.S. sneaker market is relatively stagnant. Consumer spending on discretionary items like new clothes and shoes has been sluggish, making things even more difficult for Nike.
Data from Euromonitor shows that U.S. footwear sales will be almost unchanged between 2022 and 2023, and are expected to grow by only 2% this year compared with last year. The company said sneakers are expected to grow about 5.6%.
Nike's performance has also been dragged down by China's economic imbalance. China is Nike's third largest market by revenue. This will be another key item worthy of attention in Nike's financial report. Nike's performance in China is often an indicator of the region's financial health, and in late June the company warned of a “weak outlook” for the region. However, China's central bank recently unveiled its biggest stimulus package since the COVID-19 pandemic, which is expected to give the region's economy a much-needed boost.
Nike's fiscal first quarter was supposed to end before those stimulus measures, but top executives are likely to share what sales performance looks like in the current period.
Nike shares closed at $88.40 on Monday, down about 19% year to date, significantly lagging the S&P 500's roughly 21% gain.