On October 1, Nike (NYSE: NKE) released its Q1 2025 earnings results. The company reported an impressive 34.9% earnings per share (EPS) beat — $0.70 vs consensus estimates of $0.52. However, several key metrics are lagging, and the company is still lagging behind Adidas (ETR: ADS), a key competitor.
Revenues were in line with expectations at $11.59 billion compared to estimates of $11.65 billion, but constant currency revenues fell 9% year-on-year (YoY), a stark contrast to Q1 2024, when the decline was just 2%.
Nike’s long-term decline
Looking at the last five years, the company has only managed to grow sales by 4.7% — while annualized revenue growth of 3% over the last two years points to sluggish demand. To backtrack a bit, although revenue did meet expectations, the $11.59 billion mark still represents a very troubling 10.4% YoY decline.
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The day began with Nike opening at $88.05, after which the stock price experienced a small rise to $89.58 around 1 PM EST in anticipation of the earnings call. By the end of regular market hours, the stock dropped some 2% to reach $87.81.
That, however, would not be the end of it — in after-hours trading, the stock has shed almost three times as much in terms of price, reaching as low as $84.52 for a 5.64% decline at press time. Overall, NKE shares are down 20.68% year-to-date.
Nike CEO retirement and investor day delay raise investor concerns
Nike’s troubles aren’t limited to the realm of metrics — on September 19, the company announced that CEO John Donahoe will retire effective October 13, while long-term company veteran Elliott Hill will take his place.
Although developments like these (particularly amidst less-than-stellar results) are not negative per se, they do bring about instability that investors are not too keen on.
Another catalyst for the NKE share price drop was the company’s decision to withdraw guidance, which up to now forecasted a mid single-digit revenue decrease. The earnings release also postponed Nike’s investor day, originally slated for November 19, which will be held at a later, as of yet undecided date.
Earlier this year, equity analysts set an average price target of $110.19 for NKE — in the coming days, revised price targets will serve as a good barometer for Wall Street’s expectations after factoring in the disappointing results.
It remains to be seen how Hill’s tenure will play out, particularly regarding Nike’s earlier $2 billion cost savings plan. However, disappointing results and internal instability make it unlikely that Nike stock price will recover in the short to medium term, and further downswings are likely.
