Nike () is expected to report results on its fiscal first quarter on Tuesday, October 1, with a conference call scheduled for 5:00 pm EDT. What to watch for:
GUIDANCE: In June, Nike forecast fiscal 2025 revenue down mid-single digits, with first half revenue down high-single digits. The company previously forecast first half revenue down low-single digits. For the first quarter, Nike forecast revenue to be down 10% year over year. On its fourth quarter earnings call, Nike said it expected fiscal 2025 to be a transition year. Following the earnings report, Stifel downgraded Nike to Hold, saying the FY25 guidance, the fifth downward consensus revision in six quarters, pushes prospects for a growth inflection further into 2025, which asks investors to both underwrite success of not yet proven styles and look across an uncertain consumer discretionary backdrop into the second half of 2024 until momentum could build again into the second half of 2025.Jefferies believes expectations for Q1 are “fairly low,” and that foot and web traffic data have “remained soft” and competitors continue to gain share.
CEO CHANGE: On September 19, Nike said that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO, as the company looks to shake up its leadership amid efforts to revive sales and battle competition. Hill was at Nike for 32 years and held senior leadership positions across Europe and North America. He was previously Nike’s president, consumer marketplace, leading all commercial and market operations for the Nike and Jordan brands before retiring in 2020.Deutsche Bank said the firm’s confidence in Nike’s turnaround efforts and return to sustained growth is increased following the announcement of Hill. This “highly anticipated leadership change will inject a much-needed sense of urgency,” focusing on product innovation, marketing, and rebuilding wholesale partnerships, areas that suffered under previous leadership, the analyst said. Piper Sandler views Nike appointing Elliott Hill as the new CEO, with John Donahoe stepping down earlier than the Street was expecting, as a positive for the stock, saying the news removes an overhang in leadership. Wells Fargo said the news is a key catalyst bulls have been patiently waiting for.
GUIDANCE CUT LIKELY COMING: After Nike announced that Donahoe will retire and that Hill will return to take over as president and CEO, Morgan Stanley finds change at the top to be a “positive announcement,” but also calls it “unsurprising in light of recent P&L volatility, guidance shortcomings, and a lack of strategic clarity.” The firm, which notes it had previously cautioned the negative EPS revision cycle may not be behind the business, now thinks a fiscal year guidance reduction is likely along with the company’s Q1 earnings report due on October 1 and wonders if Nike will cancel the investor day slotted for November 19 so that Hill has adequate time to assess the business, revise strategy and address the market at a later date.Truist said that the CEO change has now been “priced in” while its fundamentals remain “under pressure,” capping the stock’s near-term upside. Truist further notes that the current expectations for a sales ramp in the second half of FY25 “look optimistic,” and it sees a potential turnaround as a “long and uncertain process,” particularly given the current choppy macro environment and competition from higher-heat brands that continues to accelerate.
‘NEGATIVE CATALYST WATCH’: JPMorgan placed Nike shares on “Negative Catalyst Watch” into the fiscal Q1 earnings report. The analyst reduced Nike’s Q1 earnings per share estimate to 48c, below the consensus estimate of 52c, citing headwinds across all geographies. The firm’s field work points to consumer caution and digital promotions in China and increased challenges in North America with direct-to-consumer factory stores tied to a softer low-income consumer.More By This Author:Obesity Drug Developer BioAge Makes Nasdaq DebutWall Street’s Top 10 Stock Calls This Week – Saturday, Sept. 28Wall Street More Bullish On Meta AI Following Connect Event
Here’s What Wall Street Is Saying About Nike Ahead Of Q1 Earnings
