Nike, Inc. the global leader in sports apparel and footwear, has reported its financial results for the Q1 of fiscal 2025, ending on August 31, 2024. The report highlights significant revenue declines across multiple segments, reflecting a challenging market environment.
As the company navigates this period, it is also undergoing a leadership change, with Elliott Hill appointed as the new President and CEO, effective October 14, 2024.
Key Highlights of Q1 2025 Results:
- Total Revenue:
Nike posted revenues of $11.6 billion, marking a 10% decrease from the same period last year, and a 9% drop on a currency-neutral basis. - NIKE Direct Revenues:
These revenues fell by 13% to $4.7 billion, driven by a 20% decline in NIKE Brand Digital sales, offset by a modest 1% increase in sales from NIKE-owned stores. - Wholesale Revenues:
At $6.4 billion, wholesale revenues dropped 8%, with a 7% decline on a currency-neutral basis. - Gross Margin:
Nike’s gross margin increased by 120 basis points to 45.4%, largely due to lower product costs, warehousing savings, and strategic pricing adjustments from the previous year.
Nike’s first quarter results reflect broader challenges across global markets.
NIKE Brand Revenues reached $11.1 billion, down by 10% on a reported basis, with declines across all geographies.
Converse, the company’s subsidiary, also saw a 15% drop in revenue, ending at $501 million for the Q1.
In terms of geographical performance:
- North America recorded a 14% drop in footwear sales, with total revenues down 11%.
- Europe, the Middle East, and Africa (EMEA) also saw revenue declines of 13%.
- Greater China, often seen as a key growth region, experienced a 4% decrease in total revenue, with footwear sales down by 3%.
- In Asia Pacific and Latin America, revenues declined by 7%, reflecting broader market trends in these regions.
Amidst the release of its Q1 results, Nike is preparing for a major leadership transition. On September 19, 2024, the company announced the appointment of Elliott Hill as its new President and CEO, a move seen as pivotal to the company’s next phase of growth.
Hill’s previous leadership experience at Nike is expected to bring renewed focus on innovation and market strategy.
“Nike’s Q1 results largely met our expectations. A comeback at this scale takes time, but we see early wins—from momentum in key sports to accelerating our pace of newness and innovation.”
Matthew Friend, the company’s Chief Financial Officer
With the appointment of Hill, Nike is set to adopt a renewed growth strategy aimed at overcoming recent setbacks while capitalizing on long-term opportunities.
Nike’s net income for the Q1 dropped by 28%, settling at $1.1 billion, while diluted earnings per share fell to $0.70, a 26% decrease from the previous year.
The company attributed part of the earnings contraction to higher brand marketing expenses and a one-time tax benefit from the prior year, which raised the effective tax rate from 12% to 19.6%.
Nike’s gross margin, however, showed positive movement, increasing to 45.4%, primarily due to cost control measures, including lower product costs and warehousing efficiencies.
