Nike is expected to report declining sales and profits as the company works to revamp its product lineup and regain its cool factor. Analysts predict a significant drop in sales and a substantial decline in profits. The company's strategy to reduce supply for popular franchises like Air Force 1s, Dunks, and Air Jordan 1s is expected to have a short-term impact on sales.
Analysts are expecting earnings per share of 64 cents on revenue of $12.18 billion, according to LSEG. Sales are expected to drop more than 9% from the year-ago period and profits are projected to plunge by about 38%. This dismal outlook comes as Nike works to turn around its business and fix its product assortment by pulling back on three of its key franchises: Air Force 1s, Dunks and Air Jordan 1s.
These styles were popular under former CEO John Donahoe, but became so commonplace that they lost their cool factor. Now Nike is trying to cut back supply. Nike has warned that this strategy will pressure sales in the short term. But it has also affected Foot Locker, which missed Wall Street's estimates on the top and bottom lines in its third-quarter report Dec. 4 in part because of soft demand for Nike products, its CEO Mary Dillon told CNBC at the time. Foot Locker's dismal quarter was a warning sign for Nike and a clue that investors may need to be patient as they wait for the sneaker giant to turn its business around. When Nike reports earnings Thursday, Hill will have been in the new role for just over two months, and it's going to take time to see the effects of strategy changes. For Major League Baseball, the NFL's decision to renew its contract with Nike through 2038 was a major vote of confidence. Shares of Nike were down about 27% in 2024 as of Wednesday afternoon, compared with a roughly 27% gain for the S&P 500
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