Nike (NKE) is expected to post its fiscal first quarter earnings after the bell on Tuesday in its first report since the company announced a CEO change amid lackluster sales growth.
Elliott Hill, a former Nike executive who retired in 2020, will replace John Donahoe as CEO on Oct. 14. The news initially sent Nike stock up as much as 10%.
“Long-time NKE veteran Elliott Hill returning as CEO and its implications on NKE’s turnaround strategy is likely to dominate the narrative of the 1Q print,” Citi analyst Paul Lejuez wrote in a note to clients previewing the earnings.
Nike stock has slumped this year, falling more than 25% prior to the CEO changeup announcement on Sept. 19 amid concerns over slowing sales growth and pressure from rising competitors in the space like On (ONON) and Deckers’ (DECK) Hoka brand.
Here’s what Wall Street expects Nike to report for its fiscal first quarter:
Revenue: $11.65 billion est. vs. 12.94 billion prior
Adjusted earnings per share: $0.52 est. vs. $0.94 prior
Nike has reported single-digit revenue growth, or worse, for five straight quarters and Wall Street analysts don’t expect that trend to change much in the company’s fiscal first quarter. Consensus expectations are for the sports apparel brand to report quarterly revenue of $11.65 billion with earnings per share of $0.52. Both metrics would represent year-over-year declines from the same quarter a year ago.
To Lejuez, the key part of Tuesday night’s announcement will be how much Nike cuts expectations for upcoming quarters while laying out its plans under Hill. Lejuez expects Nike will use the CEO transition as an opportunity to lower earnings estimates for 2025 and set itself up for future beats.
“We believe [management] likely lowers full-year 2025 guidance on weakening China macro and brand reset in that [market], as well as more conservative assumptions tied to the planned innovation-driven sales acceleration in the second half of 2025,” Lejuez wrote.
In a note to clients on Monday morning, Jefferies analyst Randal Konik wrote he doesn’t expect Hill to have an impact on Nike’s performance until the fiscal year 2026. Therefore, Konik believes shares are in “no man’s land and likely remain range-bound for a number of quarters.”
UBS analyst Jay Sole noted after the CEO change that investors may soon sour again on Nike stock as focus shifts to the not “great” fundamental story following its first quarter earnings release. Sole believes that Hill’s approach to Nike’s product slump will be paramount to the market’s acceptance of the CEO change.
“The market has been very focused on how Nike will improve the amount and quality of new product innovation it brings to market,” Sole wrote on Sept. 19. “The market may wonder if Mr. Hill has the right skill set to help Nike fix its product issues.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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