Nike first quarter revenue estimates for 2025, shares dip 6%

Nike revenue estimates: Nike issued a cautionary statement on Thursday, predicting a low single-digit percentage decline in revenue for the first half of fiscal 2025. This forecast aligns with the company's decision to curtail certain product lines in a bid to streamline operations and reduce expenses.

The announcement, made after the close of trading, prompted a 6 per cent drop in Nike's shares during extended trading. Company executives conceded that their direct-to-consumer strategy had not yielded the anticipated growth and acknowledged a loss of traction in the running segment.

In December, Nike outlined a cost-saving initiative targeting $2 billion, which includes trimming the supply of underperforming merchandise and improving its supply chain efficiency.

During a post-results conference call, Nike's CFO Matthew Friend revealed plans to scale back orders for iconic shoes like the Air Force 1 and the current Pegasus Running line. This strategic shift aims to prioritise forthcoming launches and the development of new products.

CEO John Donahoe highlighted the importance of building an innovative product pipeline rather than focusing solely on individual items. Nike's recent success in surpassing third-quarter revenue and profit expectations was attributed to holiday season promotions and the introduction of new sneaker models, such as the Ultrafly trail running shoe.

Despite facing heightened competition from brands like On and Hoka, Nike reassured investors of forthcoming releases, including running shoes tailored for everyday use featuring Nike Air cushioning technology.

While newer brands have gained market share with performance-oriented designs like the Cloudflow 4 and the Clifton 9, Nike's North American and Greater China markets saw modest increases of 3 per cent and 5 per cent, respectively. Notably, promotional activities surrounding Jordan shoes buoyed sales during critical shopping periods.

Nike's quarterly earnings of 77 cents per share exceeded analyst projections of 74 cents, driven by cost-cutting measures and operational restructuring. The company reported a revenue uptick of 0.3 per cent to $12.43 billion, surpassing market estimates of $12.28 billion.

David Swartz, an analyst at Morningstar, interpreted the quarterly results as indicative of ongoing restructuring efforts, cautioning that meaningful turnaround outcomes may take time to materialise.

(With Reuters inputs)