It’s been a busy month for Nike.
After announcing on Sept. 19 that former Nike executive Elliott Hill would replace John Donahoe as chief executive office, the Swoosh is now gearing up to report earnings for the first quarter on Oct. 1.
Despite a generally positive reaction to the CEO news, analysts are broadly taking a conservative view of the stock and pointing out that big picture challenges persist for the sportswear maker. As such, some are suggesting that the company could cut its guidance for the 2025 fiscal year as it implements a longterm turnaround plan.
In June, Nike said it expects first quarter revenue to be down about 10 percent, reflecting muted wholesale order books, a softer outlook in China, as well as other factors. At the time, Nike cut its fiscal year 2025 guidance and said it expects revenues for the year to be down in the mid single digits, with revenues for the first half of the year down in the high single digits.
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Morgan Stanley analysts led by Alex Straton said in a note to investors last week that they expect Nike’s results for the first quarter to be in line with its expectations, but anticipate that the brand will cut its guidance for the full-year.
“We don’t think the negative EPS revision cycle is behind Nike and that any rate-of-change story is a ways off,” read the Morgan Stanley note. “We don’t think Q1 results shift theses on Nike meaningfully.”
According to Williams Trading analyst Sam Poser, trends may even have gotten worse since Nike’s last earnings report in June.
“The overall Nike business has not improved since fourth quarter earnings were reported, and perhaps trends have worsened, primarily due to a weakening Chinese consumer, and ongoing lack of product innovation,” Poser wrote in a note to investors last week, in which he adjusted his earnings and sales estimates for the first quarter. However, he maintained an optimistic view that Hill’s appointment as Nike CEO would “continue to be a positive catalyst for the Nike stock.”
“Today, the outlook for Nike is far better than it was at this time last week,” Poser said.
Still, analysts cautioned that it could take several quarters for Nike to fix longstanding issues in distribution, innovation and culture. Throughout the last year, Nike has continued to lose share in crucial categories like running and has been criticized for its lack of innovative products. In December, Nike announced a new round of layoffs — which have been taking effect this year — in tandem with a plan to cut costs improve its innovation pipeline.
“With a new CEO starting on Oct. 14, his impact may not bear fruit until fiscal year 2026,” Jefferies analyst Randal J. Konik wrote in Monday note to investors. “Therefore, Nike shares are in ‘no man’s land’ and likely remain range-bound for a number of quarters.”
