Nike (NKE) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 revenues were $11.6B, down 10% year-over-year, with declines in all major segments and channels; gross margin rose 120 bps to 45.4%.

• Net income fell 28% to $1.05B, and diluted EPS decreased 26% to $0.70.

• CEO transition underway as Elliott Hill becomes President and CEO effective October 14, 2024, with a focus on reconnecting with teams and evaluating strategies.

• Full-year guidance withdrawn due to CEO transition; quarterly guidance will be provided for the remainder of the fiscal year.

• Inventory rose 10% sequentially to $8.3B, driven by higher units.

Financial highlights

• NIKE Brand revenues declined 10% (9% currency-neutral), with footwear and apparel both down 10% and 9% respectively.

• NIKE Direct revenues dropped 13% to $4.7B, with digital sales down 20% and flat comparable store sales.

• Wholesale revenues decreased 8% to $6.4B.

• Gross margin expanded 120 bps to 45.4% due to lower product, warehousing, and logistics costs, and strategic pricing.

• SG&A declined 2%, with increased demand creation offset by wage-related savings.

Outlook and guidance

• Q2 revenue expected to decline 8%-10% year-over-year.

• Q2 gross margins expected to decline ~150 bps due to higher promotions, channel mix, and supply chain deleverage.

• SG&A expected to be flat year-over-year in Q2.

• Management expects continued volatility in FY2025 due to cautious consumer spending, product portfolio rebalancing, and channel mix shifts.

• No full-year guidance; revenue expectations moderated due to digital and retail traffic trends and franchise management actions.