Earnings Nike Q1 2025

Since we opened an options position on Nike before the earnings report, we are providing a summary of the key information from their latest earnings call.

Key Facts from NIKE’s Q1 Fiscal 2025 Earnings Report

1. Financial Results for Q1 2025:

• Revenues reached $11.6 billion, a 10% decrease compared to the previous year.

• NIKE Direct sales were $4.7 billion (down 13%), with a 20% drop in digital sales.

• Wholesale revenues were $6.4 billion, representing an 8% decline.

• Converse revenues dropped by 15% to $501 million.

2. Profitability and Margins:

• Gross margin increased by 120 basis points to 45.4%, thanks to lower product costs and effective cost management.

• Diluted earnings per share (EPS) were $0.70, a 26% decrease.

• Net income fell by 28% to $1.1 billion.

3. Leadership Change:

• The company announced that Elliott Hill will become the new President and CEO starting October 14, 2024, amid the ongoing leadership transition.

4. Cost Reduction:

• Selling and administrative expenses dropped by 2% to $4 billion.

• Demand creation expenses rose by 15% to $1.2 billion, primarily due to investments in sports events.

5. Increased Returns for Shareholders:

• The company returned approximately $1.8 billion to shareholders in the first quarter.

• Dividends increased by 6% to $558 million.

• Nike repurchased $1.2 billion in shares as part of a four-year, $18 billion buyback program.

These figures show a decline in revenues but an improvement in margins as part of efforts to streamline operations.

It’s clear that Nike made a misstep during COVID with its strategy to focus on the Nike Direct channel, online and own stores, pulling back from several retail chains like Foot Locker.

Additionally, on the earnings call, it was mentioned that most Olympic winners were wearing Nike, the company is heavily investing in new advertising, and they are focusing on launching new models, something they had somewhat neglected in recent years.

Nike also postponed providing guidance until the new CEO takes office.

The stock price declined around 6% after the earnings announcement. You can check out our position and analysis in the Trading Signals section.

If you’re considering investing, Nike is worth a look. With a P/E ratio of 25, a stock price in the lower half of the 52-week range, and with the new leadership on board, Nike is likely to make strong moves in the business once again.