Nike has faced significant challenges, leading to the withdrawal of its full-year forecast as sales drop.
- A 10% decrease in first-quarter revenues has impacted the sportswear giant’s financial outlook.
- Nike’s direct-to-consumer sales have diminished by 13%, and wholesale revenues fell by 8%.
- The company’s European and North American markets have experienced notable declines amidst intense industry competition.
- Nike is implementing cost-saving strategies and product streamlining to address these challenges.
Nike’s decision to withdraw its full-year forecast marks a crucial moment for the company following a challenging start to its fiscal year 2025. The decision comes as first-quarter revenues decreased by 10%, affecting the company’s financial forecast significantly. This move is seen as a strategic reset as the company prepares for the leadership of Elliott Hill, who will assume the role of CEO on 14 October, succeeding John Donahoe.
The downturn in Nike’s sales is largely attributed to decreasing consumer demand across key markets. Direct-to-consumer sales saw a drop of 13%, amounting to $4.7 billion (£3.8 billion). Additionally, wholesale revenues declined by 8%, exacerbating the company’s financial struggles.
European operations were particularly hard hit, with the EMEA region experiencing a 13% revenue decrease to $3.1 billion (£2.5 billion). This decline is driven by reduced footwear and apparel sales as competitors such as Hoka and On gain traction in the running market. North America, Nike’s largest market, also reported a significant sales plunge of 11%, primarily due to a 14% decrease in footwear sales.
In response to these disappointing figures, Nike remains committed to its cost-saving measures initiated in December 2023. The company aims to cut $2 billion (£1.5 billion) through these initiatives, which include streamlining product offerings and enhancing automation for operational efficiency. Despite these efforts, digital sales globally witnessed a 20% drop, highlighting ongoing challenges.
Nike’s Chief Financial Officer, Matthew Friend, remarked, “Nike’s first quarter 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.” He emphasised that despite the pressure, the company is optimistic about overcoming these challenges and looks forward to the strategic leadership of Elliott Hill.
Nike is navigating a difficult period with strategic adjustments and a leadership change, aiming for a sustainable recovery.
