Nike (NKE) took a hit in after-hours trading as the company reported fiscal first-quarter revenue that fell short of estimates and withdrew its outlook for the year due to a CEO transition. The sportswear giant reported earnings per share of $0.70, higher than Wall Street’s estimate of $0.52 but a 13% decline from the previous year. Revenue came in at $11.59 billion, missing analyst estimates of $11.65 billion and marking a 10% decrease from the prior year.
Nike faced a slump in both its direct-to-consumer business and wholesale division. Direct revenues were $4.7 billion, down 13% from the same quarter a year ago, while Wholesale revenues were $6.4 billion, an 8% decrease from the prior year.
In a statement on the earnings call, Nike CFO Matthew Friend acknowledged the challenges ahead, saying, “A comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner.”
Morningstar equity analyst David Swartz noted that Nike’s report was in line with expectations, as the company had previously signaled a weak sportswear market and limited innovation cycle. Swartz added, “Nike is in a situation where it doesn’t have a lot of new products coming out, and it is pulling back on some other products.”
The news of a CEO change at Nike also impacted the stock, with Elliott Hill set to replace John Donahoe on October 14. Prior to the announcement, Nike stock had fallen over 25% this year amid concerns about slowing sales growth and increased competition from brands like On and Deckers’ Hoka brand.
Looking ahead, Nike expects revenue to decline by 8%-to-10% for the current quarter, weaker than initial Wall Street expectations. The company also postponed its upcoming investor day with no rescheduled date announced.
In a client note, Jefferies analyst Randal Konik expressed skepticism about the potential impact of the CEO change, suggesting that it may not positively influence performance until fiscal year 2026. As a result, Konik believes Nike shares are likely to remain range-bound for the foreseeable future.
The competitive landscape in the sportswear industry has intensified, with Swartz noting, “This industry in sportswear is much more competitive now than it was five years ago.” While challenges remain, Nike is working on strategies to address these issues and pivot back to growth. Stay tuned to Extreme Investor Network for further updates on Nike’s performance and strategic developments in the finance and investment world.