Nike has announced the withdrawal of its full-year guidance and the postponement of its investor day as the company prepares for a leadership transition. CEO John Donahoe will step down in mid-October, making way for longtime Nike executive Elliott Hill to take the helm. This strategic pause gives Hill the flexibility to assess the company’s direction, reconnect with employees, and refine plans for fiscal year 2026 and beyond.
Nike’s financial outlook has taken a hit. The company initially projected mid-single-digit growth for fiscal 2025, but it has now cut that expectation, citing moderating revenue trends. The global sneaker giant reported fiscal first-quarter earnings of $11.59 billion, down 10% year-on-year, missing the $11.65 billion expected by analysts. While Nike managed to exceed expectations on earnings per share at $0.70, its revenue drop, particularly in North America, continues to challenge its recovery.
The company’s direct-to-consumer sales strategy, once a major growth driver, has struggled post-pandemic as customers shift back to in-store shopping. Digital sales plummeted 15%, while Nike Direct sales were down 13%. Some of Nike’s most iconic product lines, like Air Force 1, Air Jordans, and Dunks, also saw sales declines. To recapture consumer interest, Nike is cutting supply in an effort to reignite demand for these legacy products.
Wholesale relationships have also been a pain point for Nike, which previously shifted its focus away from wholesalers like Foot Locker. Under Donahoe, Nike attempted to rebuild these ties, but now it’s up to incoming CEO Elliott Hill to strengthen these relationships and revive the brand’s wholesale strategy.
China, Nike’s third-largest market, added to the company’s challenges with “soft” consumer traffic. Revenue in the region was $1.67 billion, slightly above expectations but still indicative of the broader economic struggles in the region.
Nike’s stock has declined about 18% so far in 2024, significantly underperforming the broader market. As the company navigates its leadership transition and grapples with slow growth in key markets, investors will be looking to see if Nike can regain its footing in the competitive global athletic market.
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