Nike CEO Elliott Hill Is Confident Company Is On the ‘Right Path’ Following Q3 Results
Shares of Nike ticked up nearly 3 percent after market close on Thursday as the brand reported a smaller-than-expected drop in third quarter sales.
Net income at the Beaverton, Ore.-based company in Q3 was $794 million, down 32 percent from $1.2 billion in the year-ago period. Diluted earnings per share was 54 cents, a decrease of 30 percent from 77 cents at the same time last year. Net sales in the period were $11.3 billion, down 9 percent from $12.4 billion, on a reported basis, compared to the prior year.
The company’s third-quarter results handily beat analyst estimates. Analysts, on average, were expecting earnings per share of 29 cents in the quarter. Revenue also bested analysts’ expectations of an 11.5 percent drop, according to data compiled by LSEG.
By business segment, the company said Nike brand revenues were $10.9 billion, down 9 percent on a reported basis, driven by declines across all geographies. Nike Direct revenues in Q3 were $4.7 billion, down 12 percent on a reported basis, primarily due to a 15 percent decrease in Nike brand digital and a 2 percent decrease in Nike-owned stores.
As for Nike’s wholesale channel, which the company has steadily worked on rebuilding, revenues in the quarter were $6.2 billion, down 7 percent on a reported basis. Revenues from Converse were $405 million, down 18 percent on a reported basis, due to declines across all territories.
As for footwear sales in the period, Nike said that sales in the category dropped 12 percent to $7.2 billion, down from $8.2 billion in the same time last year. Apparel sales in Q3 were $3.2 billion, down 3 percent from $3.3 billion, while equipment sales were down 2 percent to $477 million, down from $487 million.
Elliott Hill, who took on the role of president and chief executive officer of Nike, Inc. in October, said in a statement that the progress the company has made against its “Win Now” strategic priorities implemented 90 days ago reinforces his confidence that Nike is “on the right path.”
“What’s encouraging is Nike made an impact this quarter leading with sport – through athlete storytelling, performance products and big sport moments,” Hill said.
In October, Nike withdrew its guidance for fiscal 2025 in its first earnings call since announcing that John Donahoe would step down and be replaced by Hill.
Matthew Friend, executive vice president and chief financial officer of Nike, Inc., added on Thursday that the company’s outlook for the second half of fiscal 2025 remains “consistent” with what was communicated last quarter.
“The operating environment is dynamic, but what matters most for Nike is serving athletes with new product innovation and reigniting brand momentum through sport,” Friend said.