As a seasoned investor who has weathered many market storms and witnessed the rise and fall of several corporate titans, I must say that Nike‘s Q1 performance for FY2025 is a familiar dance of ups and downs. The revenue decline, while concerning, is not entirely unexpected given the competitive landscape in the sportswear industry. However, the drop in Converse sales is a bit of a surprise, considering its historical significance within the Nike family.
Despite Nike’s longtime CEO John Donahoe stepping down recently, paving the way for experienced brand executive Elliot Hill, the company is still experiencing turbulence. Recently, Nike released its first-quarter earnings report for the 2025 fiscal year, and the results are a blend of positive and negative aspects.
In simpler terms, the total income of the brand was about $11.1 billion USD, but it declined by 10% and 9%, respectively, when considering both reported figures and those adjusted for currency fluctuations. This decline was due to decreases in sales across all regions, as critics argue that the brand’s product line is too focused on lifestyle products and lacks innovation, allowing competitors like adidas and newer brands such as HOKA and On to gain ground. The report also showed a 15% drop in revenue for Converse (which falls under the larger Nike corporation) on both reported and currency-neutral bases, and a slight increase in overall gross margin. Additionally, the brand has postponed its “investor day,” which was originally scheduled for November, possibly to give Hill more time to fully settle into his role beforehand.
In his statement, Nike CFO Matthew Friend mentioned that the outcomes generally matched our predictions, and he expressed enthusiasm for John Donahoe’s upcoming tenure as CEO starting on October 14. He added that such a significant turnaround requires time, but there are encouraging early signs of success.
Despite Friend’s positive outlook on the figures, Wall Street shows a bit of skepticism. Nike’s shares dropped slightly during nighttime trading following the announcement. Yet, financial institution Jeffries boosted their estimation for Nike’s stock price from $80 USD to $85 USD, driven by investor enthusiasm over the leadership change. However, the company warned that the impact of this transition might not become evident until FY2026.
You can check out the whole report on Nike’s investor relations page.
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2024-10-02 17:55