An employee carries shoe boxes at the Footlocker store at Barton Creek Square Mall on August 28, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Nike will report quarterly earnings on Tuesday, as investors brace for another set of less-than-stellar results. The company announced last month that CEO John Donahoe would resign.
Here's what analysts expect from the world's largest sneaker company for the first fiscal quarter of 2025, according to LSEG consensus estimates:
- Earnings per share: 52 cents
- Gain: $11.65 billion
Analysts expect sales to fall by 10% compared to the same period last year and profits to fall by almost 45%.
The bleak outlook comes amid a reset at Nike. Over the past year, the company has been accused of falling behind in innovation and ceding market share to competitors as it focused on selling directly to consumers through its own websites and stores rather than through wholesalers such as Foot Locker And DSW.
In September, Nike announced that Donahoe would step down and be replaced by longtime company veteran Elliott Hill, who is expected to take over on October 14.
Under Donahoe's leadership, annual sales grew by more than 31%, but they did so by launching legacy franchises like Air Force 1s, Dunks and Air Jordan 1s—not the groundbreaking styles that made the company a global powerhouse.
In recent quarters, Donahoe has talked about the need to improve innovation and rebuild relationships with wholesalers, but the company's board of directors decided that Hill, who worked at Nike for 32 years before retiring in 2020, should take over the would be the right person to lead the next company. chapter.
Donahoe is expected to be on the company's conference call with investors Tuesday afternoon, but observers will be eager to see if there are any clues as to where the company plans to go next under Hill's leadership.
The incoming CEO will need to strengthen Nike's innovation pipeline, reset relationships with wholesalers and improve morale after a series of layoffs and a culture breakdown.
Overall, the sneaker market in the US is relatively stagnant. Consumer spending on luxury goods like new clothes and shoes has been sluggish, making Nike's situation even more difficult.
According to Euromonitor, U.S. shoe sales are expected to grow just 2% this year compared to last year, after seeing little increase between 2022 and 2023. The company expects athletic footwear to grow by about 5.6%.
Nike's performance has also been weighed down by the uneven economy in China, Nike's third-largest market by revenue, which will be another key item to watch in Nike's earnings report. Nike's performance in China is often an indicator of the region's financial health, and in late June the company warned of a “softer outlook” in the region. However, China's central bank recently unveiled its biggest stimulus measures since the Covid pandemic, which is expected to give the region's economy a much-needed boost.
Nike's fiscal first quarter would have concluded before these incentives, but executives can share their thoughts on how sales are performing in the current period.
Shares of Nike closed Monday at $88.40, down about 19% so far this year, and significantly underperforming the S&P 500's gain of about 21%.
