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Nike said revenues sank 10 per cent to $11.59 billion for the first quarter of fiscal 2025, down from $12.94 billion the year prior. The results just missed analyst expectations of around $11.65 billion. Revenues for the Nike brand were $11.1 billion, down 10 per cent year-on-year; and revenues for the Converse brand were $501 million, down 15 per cent. Profits for the quarter also fell 28 per cent to $1.1 billion.
Despite the miss, shares saw a slight uptick of 0.7 per cent after markets closed on Tuesday as the company awaits the arrival of incoming CEO Elliott Hill.
On 19 September, Nike announced that CEO John Donahoe will be replaced by Nike veteran Hill, effective 14 October. Tuesday’s miss illustrates the challenges ahead for Hill, who will be tasked with steering a turnaround by spearheading innovation initiatives to compete with younger players like Hoka and On, and evening out Nike’s distribution ecosystem, per analyst insights.
“As we look ahead, we are excited to welcome Elliott back to Nike. Over his 32 years with the company, he built a proven track record of leading our global team, brands and businesses with significant expertise in delivering growth by bringing product and storytelling with impact into an integrated marketplace,” said Matthew Friend, EVP and chief financial officer, after thanking Donahoe for his contributions in the role. (Donahoe did not participate in the call.) Friend also noted a positive employee response to the news. “You can feel the energy and the enthusiasm walking around campus and we’ve heard nothing but excitement from our teammates around the world,” he said.
On the call, Friend also addressed the impact of this CEO transition, telling investors that the company would be withdrawing its full-year guidance. “This provides Elliot with the flexibility to reconnect with our employees and teams to evaluate the current strategy and business trends and develop our plans to best position the business for fiscal 2026 and beyond.” Nike also confirmed that it will postpone its Investor Day, which was set to take place on 19 November.
On the first-quarter results, Friend acknowledged the lag. “A comeback at this scale takes time and while there are some early wins, we have yet to turn the corner today,” he said.
Nike’s direct-to-consumer revenues were especially hard-hit, falling to $4.7 billion, down 13 per cent year-on-year. “Traffic declines across Nike Direct were more significant than anticipated,” Friend said. Nike attributed this drop primarily to the 20 per cent decrease in sales on Nike.com and its mobile apps — only offset, in part, by a 1 per cent increase in Nike-owned stores. Wholesale, which has weakened after Nike pivoted focus to direct channels and pulled inventory from some partners, saw an 8 per cent revenue dip to $6.4 billion.
By region, North America sales were down 11 per cent to $4.8 billion; EMEA was down 13 per cent to $3.1 billion; Greater China was down 4 per cent to $1.7 billion; and Asia Pacific Latin America was down 7 per cent to $1.5 billion. China was a particular pain point due to elevated inventory levels in the region on moderated consumer spend.
Looking forward, Friend promised that Nike will be focusing on investor concerns. “As we look ahead, we are working to position new products in the path of the consumer, create scale for new ideas and drive more balanced marketplace growth,” he said.
Friend highlighted new innovations planned for the coming seasons, including new cushioning and sneaker models, a refreshed lineup of performance running apparel – particularly for womenswear – and new franchises under $100 “that scale innovation to more accessible prices”, Friend said.
“As we look to the spring season, contribution from newness and innovation will take a significant step forward with growth of footwear units,” Friend said. “And over the coming season, we expect to see sequential gains in the percentage of newness and innovation as a mix of our total footwear business.”
Nike expects second-quarter revenues to be down in the 8 to 10 per cent range, with margins down approximately 150 basis points.
Beyond the second quarter, Nike’s revenue expectations have moderated since the start of the year, though Friend declined to share figures. Nike continues to see indications of slight second half improvements in revenue trends versus the first half.
“All told, we expect that the return to strong growth will take time, but we believe that we have all the right building blocks,” Friend said. “Especially with Elliot now leading us forward.”
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