Nike Faces 10% Revenue Decline Amid CEO Transition

Nike reported a 10% drop in revenues for the first quarter of fiscal 2025, totaling $11.59 billion, compared to $12.94 billion in the previous year. The results fell slightly below analyst expectations of $11.65 billion. The Nike brand generated $11.1 billion in revenue, marking a 10% year-on-year decline, while Converse saw a 15% decrease, with revenues at $501 million. Quarterly profits also declined by 28%, amounting to $1.1 billion.

Despite the underperformance, Nike shares saw a modest increase of 0.7% after markets closed on Tuesday, as the company prepared for incoming CEO Elliott Hill to take over leadership.

On September 19, Nike announced that its current CEO, John Donahoe, would be succeeded by Nike veteran Elliott Hill on October 14. The recent financial shortfall highlights the challenges awaiting Hill, who will be tasked with revitalizing the company’s performance, driving innovation to compete with brands like Hoka and On, and optimizing Nike’s distribution channels, as per analysts’ assessments.

Matthew Friend, Nike’s Executive Vice President and Chief Financial Officer, expressed excitement about Hill’s return to the company. He pointed to Hill’s 32-year history at Nike, where he built a strong reputation for growing global teams and businesses by effectively combining product development with impactful storytelling. Matthew Friend also extended his gratitude to Donahoe for his leadership, although Donahoe did not participate in the investor call. He added that the response from Nike employees had been overwhelmingly positive, noting the renewed energy and excitement throughout the company.

During the investor call, Friend addressed the implications of the CEO transition, announcing that Nike would be withdrawing its full-year financial guidance. This decision was made to provide Hill with the flexibility to reconnect with teams and reassess the company’s current strategies and market trends. Nike also revealed that its Investor Day, originally scheduled for November 19, would be postponed.

Commenting on the first-quarter results, Friend acknowledged that the company had yet to fully recover. While some early successes were evident, he noted that Nike had not yet turned the corner. The direct-to-consumer segment was particularly impacted, with revenues falling by 13% year-on-year to $4.7 billion. This decline was largely attributed to a 20% drop in sales through Nike.com and its mobile apps, which was only partially offset by a 1% increase in sales at Nike-owned stores. Wholesale revenues also fell by 8% to $6.4 billion, as Nike’s shift toward direct channels led to reduced inventory availability for some partners.

Regionally, North America saw an 11% drop in sales to $4.8 billion, while EMEA was down 13% to $3.1 billion. Greater China experienced a 4% decline to $1.7 billion, and Asia Pacific & Latin America reported a 7% drop to $1.5 billion. In China, Nike faced additional challenges due to high inventory levels and weaker consumer spending in the region.

Looking ahead, Friend reassured investors that Nike would be addressing their concerns by positioning new products to meet consumer demand and scaling innovative ideas to promote balanced marketplace growth. He highlighted upcoming innovations, such as new cushioning technologies, refreshed performance running apparel, and new footwear franchises under $100 aimed at making innovation more accessible.

As Nike looks to the spring season, Friend noted that the company expects significant growth in footwear units driven by these new innovations. Over the coming months, Nike anticipates that a greater portion of its footwear business will consist of new and innovative products.

For the second quarter, Nike forecasts an 8% to 10% decline in revenues, with margins expected to decrease by approximately 150 basis points. Beyond the second quarter, revenue expectations have been tempered, though Friend refrained from providing specific figures. Nonetheless, Nike remains optimistic about slight improvements in revenue trends during the second half of the fiscal year compared to the first half.

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