Nike (NKE) stock sank about 5% after hours Tuesday evening as the company reported fiscal first quarter revenue that missed estimates and withdrew its outlook for the year amid a CEO transition.
Nike Direct revenues were $4.7 billion, a 13% decline from the same quarter a year ago.
The quarterly report is Nike’s first since the company announced a CEO change amid lackluster sales growth.
Elliott Hill, a former Nike executive who retired in 2020, will replace John Donahoe as CEO on Oct. 14.
The news initially sent Nike stock up as much as 10%.
In the midst of a CEO transition, Nike (NKE) reported fiscal first quarter revenue that fell short of expectations and revised down its full year outlook, sending the company’s stock down roughly 5% after hours on Tuesday.
The shoe behemoth revealed first-quarter earnings per share of $0.70, down 26% from the same period last year but above Wall Street’s estimate of $0.52. In the meantime, Nike’s $11.59 billion in revenue was 10% less than the same period last year and missed analyst estimates of $11.65 billion.
Both Nike’s direct-to-consumer and wholesale businesses experienced a decline in sales. Revenues for Nike Direct came in at $4.77 billion, down 13% from the same period last year. With respect to the same period last year, wholesale revenues decreased by 8% to $6.44 billion.
During the company’s earnings call on Tuesday night, Nike CFO Matthew Friend stated, “A comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner.”.
Nike’s report was “pretty much what people expected,” according to Morningstar equity analyst David Swartz, who spoke with Yahoo Finance. ****.
As far back as December 2023, Swartz claimed, “Nike has really been warning us that the sportswear market was not very strong and that its innovation cycle was not looking particularly good for the beginning of the fiscal year 2025 either.”. At the moment, Nike is suffering from a lack of new product releases and a pullback on some existing lines. “.
Nike released its first quarterly report since announcing a change in the CEO in the midst of sluggish sales growth. On October 10, Elliott Hill, a former Nike executive who retired in 2020, will take over as CEO in place of John Donahoe. 14. . At first, the news caused Nike’s stock to rise by up to 10%.
Prior to the announcement of the CEO change on September, Nike’s stock had already dropped more than 25% this year. 19, in response to worries about a decelerating rate of sales growth and pressure from emerging rivals such as On (ONON) and Deckers’ (DECK) Hoka brand.
According to Swartz, the sportswear industry is far more competitive now than it was five years ago. It was a little bit too late for Donahoe to realize that. “. .
Friend stated that Nike anticipates revenue to drop by 8 to 10 percent for the current quarter, which is less than Wall Street’s initial projection of a 6 to 7 percent decline.
According to Friend, “given traffic trends on Nike, digital retail sales trends across the marketplace, and final order books for spring, revenue expectations have moderated since the start of the year.”.
